Asian Currencies Weaken as Yen Hits Nine-Month Low and Dollar Strengthens
Most Asian currencies slipped on Tuesday, with the Japanese yen falling to a nine-month low as the U.S. dollar strengthened on renewed optimism over progress to end the longest government shutdown in U.S. history.
Easing bets on a potential Federal Reserve rate cut in December also drove traders toward the dollar, while ongoing uncertainty about the U.S. economy—amplified by missing official data—added to the cautious sentiment across Asia.
Dollar Gains After U.S. Senate Passes Shutdown Bill
The U.S. dollar index and dollar index futures both rose about 0.1% during Asian trading hours after the U.S. Senate approved a bill to restore government funding and end the long-running shutdown.
The bill now moves to the House of Representatives, where the Republican majority is expected to pass it as early as Wednesday, before sending it to President Donald Trump for approval.
If signed into law, this legislation will end the longest government shutdown in American history, which reached its 41st day on Monday.
A resolution to the shutdown would also allow the release of key U.S. economic data, giving global markets fresh insights into the health of the world’s largest economy.
Asian Currencies Under Pressure as Rate Cut Bets Fade
Broader Asian currencies weakened amid declining expectations of a Federal Reserve rate cut in December.
The Japanese yen saw the steepest drop, with the USD/JPY pair rising 0.2% to 154.49—its highest level since February. Traders also scaled back bets on a rate hike by the Bank of Japan, further weighing on the currency.
The Chinese yuan (USD/CNY) edged 0.1% higher, pressured by concerns over slowing economic growth. Mildly positive October inflation data did little to strengthen sentiment toward the yuan.
The Australian dollar (AUD/USD) slipped 0.1%, even after a private survey showed a sharp improvement in Australian consumer confidence.
Elsewhere, the South Korean won (USD/KRW) fell 0.6%, while the Singapore dollar (USD/SGD) dropped 0.1%. The Taiwan dollar (USD/TWD) remained flat, and the Indian rupee (USD/INR) weakened slightly.
Traders Reassess Fed Outlook for December
Market participants continued to reduce expectations for a U.S. rate cut in December amid persistent uncertainty over economic momentum. The Federal Reserve itself signaled a cautious stance during its October meeting, emphasizing that inflation remains above target.
According to the CME FedWatch Tool, traders now assign a 57.4% probability of a 25-basis-point rate cut in December—down from 61.9% the previous day.
