Asian Currencies Struggle as Strong Dollar Holds Ahead of Key US Data
Most Asian currencies traded steady on Thursday after suffering heavy overnight losses. The U.S. dollar stayed firm following signals from Federal Reserve officials that interest rate cuts will happen gradually. Investors are now waiting for key U.S. economic data later in the day.
The US Dollar Index, which measures the greenback against a basket of major currencies, slipped 0.1% after jumping 0.6% to a two-week high overnight. Futures for the Dollar Index also moved 0.1% lower as of 04:30 GMT.
Federal Reserve Signals Caution on Rate Cuts
Fed Chair Jerome Powell warned on Tuesday that the central bank must remain “measured” when easing policy. Other policymakers also stressed caution, suggesting that the Fed will not rush into aggressive rate cuts.
These remarks cooled investor bets on faster rate reductions, even after the Fed’s first cut since December. More Fed officials are set to speak this week, keeping traders alert for new guidance.
Markets are now waiting for several U.S. economic reports to gain clarity on the Fed’s next move. Weekly jobless claims, due Thursday, will be closely watched as policymakers recently cited a cooling labor market as the main reason for the latest rate cut.
Later in the day, an advance reading of second-quarter GDP will be released, while Friday brings the PCE price index, the Fed’s preferred inflation gauge.
Asian FX Movements and BOJ Minutes
The Japanese yen slipped 0.2% on Thursday after a nearly 1% jump overnight. Minutes from the Bank of Japan’s July meeting revealed that some policymakers supported considering future rate hikes, showing divisions within the board.
The South Korean won fell 0.3% after a 0.7% rise overnight. The Singapore dollar traded flat, while the Indian rupee edged 0.2% lower.
In China, both the onshore yuan (USD/CNY) and offshore yuan (USD/CNH) slipped 0.1%. Meanwhile, the Australian dollar rose 0.3% against the U.S. dollar.
