Asian Currencies Steady as Dollar Holds Firm on U.S. Shutdown Hopes
Most Asian currencies traded within a narrow range on Monday, while the U.S. dollar remained steady as investors focused on potential progress to end the prolonged U.S. government shutdown.
The Chinese yuan showed little reaction to fresh inflation data, which indicated a mild improvement in prices. Meanwhile, the Japanese yen weakened amid doubts that the Bank of Japan will raise interest rates in the near term.
Across the region, markets lacked clear trading cues. Persistent caution surrounding a possible U.S. interest rate cut in December also kept traders on the sidelines.
Dollar Steady as Washington Works Toward Reopening Government
The dollar index and dollar index futures both rose about 0.1% in Asian trading, stabilizing after minor declines last week.
Investor attention remained fixed on developments in Washington, where Congress is working to end the longest government shutdown in U.S. history, now entering its 40th day.
Reports suggested that a group of Senate Democrats agreed to back a Republican funding bill to keep the government open until January 30. A Senate roll call vote on the proposal was still underway as of 22:33 ET (03:33 GMT).
The shutdown has significantly disrupted public services and delayed several key economic data releases, raising concerns about its drag on U.S. economic growth.
Chinese Yuan Unmoved Despite Positive Inflation Data
The USD/CNY pair traded near 7.1209 yuan, showing limited reaction to China’s latest inflation report.
Data revealed that consumer price index (CPI) inflation in October rose slightly above expectations, while producer price index (PPI) inflation contracted at a slower pace. Analysts attributed the improvement mainly to strong holiday spending, but cautioned that China’s deflationary pressures have not disappeared.
“These gains largely reflect temporary factors, most notably higher gold prices,” noted Capital Economics, adding that China’s broader deflation problem persists.
Mixed Moves Across Asian Currencies
Elsewhere, Asian currencies traded in a flat-to-moderate range. The Japanese yen (USD/JPY) rose nearly 0.4% as traders dialed back expectations for a BOJ rate hike.
The Australian dollar (AUD/USD) gained 0.3%, supported by stable commodity sentiment, while the Singapore dollar (USD/SGD) added 0.1%.
The Taiwan dollar (USD/TWD) rose 0.1%, and the Indian rupee (USD/INR) remained largely unchanged during the session.
Outlook
Traders are closely watching both the progress of the U.S. government funding deal and signals from major central banks in Asia. Until clearer direction emerges on fiscal and monetary fronts, regional currencies are likely to remain range-bound, with the U.S. dollar maintaining a position of relative strength.
