👀 Ones to watch: Undervalued stocks to buy before they report Q3 earningsSee Undervalued Stocks

Asia FX retakes some ground as dollar retreats before more Fed cues

Published 02/21/2024, 12:04 AM
© Reuters
USD/JPY
-
AUD/USD
-
USD/INR
-
USD/CNY
-
DX
-

Investing.com-- Most Asian currencies rose on Wednesday, seeing some relief as the dollar retreated in anticipation of more cues from the Federal Reserve on the path of interest rates. 

Regional units were still nursing steep losses in recent sessions as waning expectations of early interest rate cuts by the Fed saw the dollar race to three-month highs.

But the greenback retreated significantly from recent highs this week, offering some relief to Asian markets.

Dollar falls with Fed minutes, speakers in sight

The dollar index and dollar index futures both fell about 0.1% each in Asian trade, with investors collecting some profits in the greenback before a barrage of Fed cues this week.

The minutes of the Fed’s late-January meeting are due later on Wednesday, after the bank kept rates steady and largely downplayed expectations of early interest rate cuts.

Beyond the minutes, a slew of Fed officials are also set to speak this week, including  Raphael Bostic and Michelle Bowman later on Wednesday. 

Chinese yuan rises on economic recovery hopes

The Chinese yuan rose 0.1% on Wednesday, also benefiting from some optimism over a potential economic recovery in Asia’s largest economy. 

Data showing increased consumer spending and travel demand during the Lunar New Year holiday drove up hopes over a bigger recovery in consumption- which is a key driver of the Chinese economy.

The People’s Bank of China also cut its five-year loan prime rate by a bigger-than-expected margin on Tuesday, pointing to more support for the Chinese economy. 

While lower rates bode poorly for the yuan, losses in the currency were stemmed by government intervention in currency markets. Media reports showed several Chinese state-owned banks buying yuan and selling dollars on the open market. 

Other Asian currencies trended higher. The Japanese yen rose 0.1% but remained at the 150 level. Data showed a bigger-than-expected increase in Japanese exports in January, while imports contracted more than expected. 

The Singapore dollar and South Korean won both traded sideways.

The Australian dollar rose 0.3%, leading gains across Asia on optimism over China, while stronger-than-expected Australia wage price index data for the fourth quarter drove bets that the Reserve Bank will keep interest rates higher for longer.

The Indian rupee was flat after strengthening further away from the 83 level in overnight trade.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.