Most Asian currencies were steady on Wednesday as traders assessed rising expectations of a U.S. interest rate cut next month. The Australian dollar strengthened after hotter-than-expected inflation data, while the New Zealand dollar advanced sharply following the central bank’s latest policy move.
The U.S. Dollar Index held flat during Asian trading after sliding 0.5% overnight. Dollar Index futures were also stable as of 04:48 GMT.
Fed Rate-Cut Expectations and Next Chair Speculation
Fed funds futures now point to nearly an 84% chance of a 25-basis-point rate cut, supported by softer U.S. retail sales and producer price data. Still, markets remain split on whether the Federal Reserve will actually move in December.
The latest figures reinforced the view that inflation is easing gradually, helping fuel rate-cut expectations. However, recent remarks from several Fed officials—emphasizing a meeting-by-meeting, data-driven approach—have kept confidence in check.
Speculation around the next Federal Reserve chair also added to market attention, with White House Council Director Kevin Hassett viewed as a leading candidate.
“Kevin Hassett is perceived as closely aligned with President Trump, and markets expect he would bring a similar stance on interest rates to the Fed,” MUFG analysts noted.
The U.S. dollar softened overnight, lifting Asian currencies on Tuesday, but most regional pairs stabilized by early Wednesday.
The Japanese yen’s USD/JPY pair was steady after a 0.5% decline overnight. The move followed a Reuters report suggesting the Bank of Japan may raise rates as early as next month amid renewed worries over yen weakness and reduced political pressure to maintain ultra-loose policy.
The South Korean won’s USD/KRW pair inched up 0.1%, while the Singapore dollar’s USD/SGD traded flat.
The Indian rupee’s USD/INR rose 0.1%.
In China, both the onshore USD/CNY and offshore USD/CNH remained largely unchanged.
Aussie Dollar Rises on Hot CPI; Kiwi Jumps After RBNZ Decision
The Australian dollar outperformed regional peers after data showed consumer inflation remained stubbornly elevated in October. The AUD/USD pair rose 0.6% on Wednesday, marking its fourth straight session of gains.
The stronger inflation print reduced expectations of further easing from the Reserve Bank of Australia, with traders scaling back bets on a December rate cut.
The New Zealand dollar’s NZD/USD pair climbed 1.2% after the Reserve Bank of New Zealand cut its cash rate by 25 basis points to 2.25%—a move widely anticipated—but signalled the easing cycle may now be finished.
The central bank now expects the cash rate to fall to 2.20% in the first quarter of 2026, effectively ruling out additional cuts in the near term.
