Asian Currencies Steady as Dollar Holds Near 3-Month High; RBA Rate Decision in Focus
Most Asian currencies traded in narrow ranges on Monday, extending last week’s muted performance against a firm U.S. dollar after the Federal Reserve downplayed expectations for a December rate cut.
The Chinese yuan saw little reaction to a new U.S.–China trade deal, while the Australian dollar held steady ahead of the Reserve Bank of Australia (RBA) meeting on Tuesday. Analysts widely expect the RBA to keep interest rates unchanged, signaling a cautious but steady policy stance.
The Japanese yen remained near its nine-month low, weighed down by a dovish outlook for future rate hikes from the Bank of Japan. A market holiday in Japan also contributed to light trading volumes across Asia.
Dollar Steadies Near Three-Month High Ahead of Labor Data
The U.S. dollar index and futures eased slightly in Asian trading, but stayed close to the three-month peak reached on Friday.
Investors are now turning their attention to private labor market reports after the ongoing U.S. government shutdown, which has stretched into a full month, delayed the release of most official economic data.
These private employment figures will be closely monitored for clues on Federal Reserve policy, especially after Fed Chair Jerome Powell tempered market hopes for another rate cut in December.
Powell’s cautious comments, delivered after the Fed’s recent 25 basis point rate cut, have fueled dollar strength. A recently signed U.S.–China trade deal—ensuring rare earth supplies for at least a year—also supported the greenback’s resilience.
Aussie Dollar Flat Ahead of RBA Meeting
The Australian dollar (AUD/USD) traded flat to slightly lower on Monday, with markets focused on Tuesday’s RBA rate decision.
Economists expect the central bank to hold rates steady but maintain a hawkish tone, following a stronger-than-expected inflation reading in the third quarter.
Although the RBA had eased policy earlier this year, the bank has recently adopted a more hawkish stance amid sticky inflation and a resilient labor market. Comments from Governor Michele Bullock will be closely analyzed for signals on future moves.
Across the region, broader Asian currencies saw limited movement in thin trading. The USD/JPY pair was steady around 154 yen, close to its highest level since February.
The USD/CNY hovered near 7.116 yuan, slightly higher after touching a one-year low last week, with the currency showing minimal reaction to the trade deal.
A private PMI report on Monday showed China’s manufacturing activity expanded at a slower pace than expected in October, though it contrasted with official data that pointed to contraction.
Elsewhere, the Singapore dollar (USD/SGD) rose 0.1%, while the Taiwan dollar (USD/TWD) edged slightly higher. The Indian rupee (USD/INR) also firmed modestly but remained close to its record low of 89 per dollar.
