Investing.com — Most Asian currencies rose slightly on Friday, while the dollar fell from two-month highs although hot consumer inflation data boosted bets on a smaller interest rate cut by the Federal Reserve.
But most regional currencies suffered losses in recent sessions, as recent US data indicated that interest rates would remain relatively higher for a longer period.
The South Korean won held firm even as the Bank of Korea lowered interest rates and signaled further possible cuts, while the Chinese yuan rose with the focus squarely on more fiscal stimulus measures from Beijing.
The dollar fell as markets weighed hot CPI and rising unemployment claims
The two indexes fell 1% each in Asian trading, retreating from the highest level in a month recorded during overnight trading.
While the dollar initially rose on the back of a stronger-than-expected September inflation reading, it pared gains after labor data showed a larger-than-expected increase in weekly unemployment claims.
Traders are still holding bets that the Fed will cut interest rates by 25 basis points in November, showing a chance of 81.3%.
But signs of weakness in the labor market are likely to prompt the Fed to cut interest rates steadily in the medium term, even as inflation remains relatively high.
Inflation data is due later on Friday and is expected to provide further signals about the world’s largest economy.
Chinese yuan firm with fiscal stimulus on the horizon
The Chinese yuan consolidated slightly, with the pair falling by 0.1%.
The focus was squarely on the Finance Ministry’s upcoming briefing, where the government said it would outline fiscal stimulus plans.
Analysts expect Beijing to identify at least 2 trillion yuan ($283 billion) in financial support, with the bulk of the amount targeted to support private consumption.
Saturday’s briefing follows a briefing on recent monetary stimulus measures that was largely disappointing. Investors also remained skeptical about China’s ability to take further fiscal measures, given the country’s ballooning debt levels.
South Korea won companies after the Bank of Korea’s interest rate cut
The South Korean won consolidated on Friday, with the pair falling by 0.2%.
The won’s strength came even as the Bank of Korea cut 25 basis points to 3.25% – its first interest rate cut in more than four years.
The central bank left the door open for further easing, as the Korean economy suffers from sluggish growth and slowing inflation.
Broader Asian currencies were lower and mostly posted weekly losses, as the dollar headed for weekly gains.
The Japanese yen pair settled at 148.71 yen, after approaching 150 yen earlier in the week.
The Australian dollar pair rose 0.2% after losing its gains earlier in the week.
The Indian rupee pair remained close to its record highs of over Rs 84.