Investing.com — Most Asian currencies rose on Thursday, tracking dollar weakness as soft employment data continued to flow, raising bets that the Federal Reserve will start cutting interest rates in the coming months.
The US currency hovered just above its lowest level in two months, and remained weak as expectations of interest rate cuts pushed traders into more risk-driven assets. US Treasury yields also fell.
Dollar near two-month low, rising bets on interest rate cuts in September
Both fell about 0.2% in Asian trading, remaining near their weakest levels since early April.
The dollar saw renewed weakness on Wednesday after weakness signaled a further slowdown in the labor market.
The reading came after a soft jobs print, and also paved the way for a light reading on Friday.
Other economic indicators also pointed to some slowdown in the world's largest economy, which could offer a softer outlook for inflation and give the Fed more confidence to start cutting interest rates.
Traders believe the central bank will cut interest rates by 25 basis points in September.
This idea has been reinforced by most Asian currencies. The Japanese Yen pair fell by 0.3% and remained well below recent peaks. The Bank of Japan is scheduled to meet next week, and is expected to tighten policy after that.
The Australian dollar rose nearly 0.3%, even as the country's trade data fell sharply in April. But it expanded.
The Chinese yuan pair fell slightly, but remained close to the six-month highs reached in May. Sentiment towards China deteriorated in recent sessions as traders awaited more signals about the country's plans to support economic growth. Key trade data was also available this week.
The Singapore dollar pair fell by 0.2%, while the South Korean won pair fell by 0.1% in holiday trading.
The Indian rupee is weak amid post-election volatility
The Indian rupee pair, which measures the number of rupees needed to buy one dollar, remained close to record levels of over 83 rupees on Thursday.
The Indian currency has seen sharp fluctuations this weeks, briefly reaching record levels after the results of the 2024 general elections showed that the current alliance led by the Bharatiya Janata Party won a much smaller majority than expected. The results presented a difficult third term for Prime Minister Narendra Modi, especially with regard to implementing economic reforms.