Most Asian currencies held steady on Tuesday as investors grew more cautious ahead of the Federal Reserve’s policy meeting, which begins later today. The Australian dollar, however, edged higher after the country’s central bank kept interest rates unchanged, as widely expected.
Trading activity across Asian foreign exchange markets remained subdued. Many traders stayed on the sidelines while waiting for guidance from the Federal Reserve, especially commentary from Fed Chair Jerome Powell and updated economic projections. These signals could shape expectations for the central bank’s upcoming policy direction.
The U.S. Dollar Index was also quiet during Asian trading hours.
Asia FX Steady as Markets Focus on Fed Rate Outlook
Expectations for a 25-basis-point rate cut by the Fed remain strong. Futures markets currently assign an 87% probability that the central bank will ease policy on December 10. These bets reflect hopes that cooler inflation or softer labor data may support a rate cut.
Even so, some investors remain cautious. Recent mixed messages from policymakers have highlighted uncertainty surrounding the strength of the U.S. economy. As a result, a slower or more gradual easing cycle is still possible.
Within this environment, most Asian currencies moved in tight ranges.
The Japanese yen’s USD/JPY pair and the Singapore dollar’s USD/SGD pair traded flat.
The South Korean won’s USD/KRW pair also showed little movement.
The Indian rupee’s USD/INR pair inched 0.1% higher.
In China, the onshore yuan pair USD/CNY was steady, while the offshore USD/CNH slipped 0.1%.
RBA Holds Rates; Australian Dollar Moves Higher
The Australian dollar strengthened, with the AUD/USD pair rising 0.2% after the Reserve Bank of Australia kept its cash rate at 3.60%. This decision was fully expected by markets.
The RBA noted that inflation risks had “tilted to the upside,” adding that stronger-than-anticipated private demand could increase pressure on economic capacity. For now, the bank plans to remain patient as it evaluates the persistence of inflation.
The RBA’s July–August–May easing cycle appears to be on pause for the near term, as officials hold off on additional cuts while underlying inflation remains elevated.
