Investing.com – Most Asian currencies maintained a narrow range on Thursday as investors digested mixed signals in US monetary policy, while a market holiday in China kept volumes capped.
Federal Reserve Chairman Jerome Powell reiterated the bank’s hawkish stance when testifying before the House of Representatives Congressional Financial Services Committee on Wednesday, though he did not directly indicate that interest rates would rise in July.
This was also contradicted by other Fed members who have called for a prolonged pause in the central bank’s rate hike cycle to monitor the effects of the recent monetary policy tightening.
Mixed signals weighed on the dollar, with it falling slightly in Asian trade after losses incurred overnight.
However, Asian currencies benefited a bit from the dollar’s weakness, with Powell set for later in the day.
The scarcity of domestic economic signals, amid the Chinese market holiday, also saw signs of small moves in regional currencies.
It fell 0.2% while it rose 0.2% ahead of the country’s interest rate decision later on Thursday. It is widely expected to keep interest rates steady, as inflation has eased in recent months.
The Japanese yen approached a six-month low amid ominous signals from the Bank of Japan
It rose 0.1% on Thursday, but traded near six-month lows amid a group of Bank of Japan members calling for loose monetary policy.
Bank of Japan board member Asahi Noguchi said the central bank should maintain its ultra-loose policy in the near term to ensure steady wage growth, echoing comments by her counterpart Seiji Adachi on Wednesday, who called for no changes to the bank’s yield curve control policy. Japan. .
The Bank of Japan largely stood by its ultra-loose policy earlier in June, with signs that inflation had peaked giving the bank a bit more room to keep interest rates low. But this hit hard on the yen amid a widening gap between domestic and foreign interest rates.
The focus now, due on Friday, is for more signals about the path of monetary policy.
The Australian dollar lags amid uncertainty in China
It fell 0.2% on Thursday, pressured by uncertainty over China’s stimulus measures and commodity demand.
China cut its record rate this week, disappointing some traders hoping for a bigger cut, which in turn weighed on currencies with high trade exposure to the mainland.
Foreign trade was flat, but was near six-month lows.