Investing.com — Most Asian currencies rose slightly on Thursday, recovering some of recent losses, while the dollar held near a seven-week high ahead of key consumer inflation data.
Regional currencies suffered losses over the past week amid growing doubts about the pace of future interest rate cuts by the Federal Reserve.
This trend was offset somewhat by minutes from the Fed’s September meeting which showed policymakers’ full support for the central bank’s 50 basis point cut at that time. But they also remained non-committal about the pace of future easing.
Some improvement in sentiment towards China also pushed Asian currencies, with Beijing signaling plans to begin implementing fiscal stimulus measures.
The dollar stabilizes with the release of consumer price index data
The F index fell slightly in Asian trading, but remained close to the seven-week high it recorded earlier this week.
The focus was squarely on inflation data due later in the day, which will likely factor into the Fed’s interest rate plans. The data is expected to show headline CPI inflation fell slightly, while remaining steady.
Strong jobs data released last week saw traders call off bets that the central bank will cut interest rates by 50 basis points again in November.
Traders saw a 79.5% chance of a 25 basis point cut in November, and a 20.5% chance of a suspension.
Chinese yuan firms with focus on fiscal stimulus
The Chinese yuan pair fell 0.2%, retreating from some recent weakness as traders eye more stimulus measures from Beijing to support growth.
China’s Finance Ministry said it will hold a briefing on Saturday to outline its fiscal stimulus plans, after a raft of recent monetary stimulus measures largely disappointed markets.
However, any further stimulus measures portend a weaker yuan, especially if domestic interest rates decline further.
Most Asian units rose on Thursday but suffered recent losses. The Japanese yen pair fell by 0.1% after hitting its highest level in more than two months. The currency received little support from stronger-than-expected inflation data, with markets betting that the Bank of Japan will have difficulty raising interest rates further.
The South Korean won pair rose by 0.3%, while the Singapore dollar pair fell slightly.
The Indian rupee pair remained close to record highs, with the rupee facing weakness after the Reserve Bank of India signaled a shift away from its hawkish stance.
The Australian dollar pair rose 0.2%, tracking some optimism about China.