Most Asian currencies moved in a narrow range on Monday, while the dollar steadied after recent losses as traders awaited a series of additional signals on the Federal Reserve and U.S. inflation.
The Australian dollar was among the best performing currencies, rising ahead of a Reserve Bank of Australia meeting where the central bank is likely to adopt a hawkish stance.
Regional trading volumes were thin due to a Japanese market holiday. But the yen weakened, retreating further from a nine-month high hit last week. The pair rose 0.3% to 144.32 yen.
But with the exception of the yen, most Asian currencies were sitting on some of the gains they made last week, after the Federal Reserve cut interest rates by 50 basis points.
Australian Dollar Rises Ahead of RBA Decision
The Australian dollar pair rose 0.3% in anticipation of hawkish signals from the Reserve Bank of Australia on Tuesday.
The Reserve Bank of Australia is widely expected to take a hawkish stance. But rising inflation and recent strength in the labour market are expected to force the RBA to take a hawkish stance.
The central bank is also expected to signal that interest rates will remain high for longer – a scenario that bodes well for the Australian dollar. The currency was trading near a ten-month high.
Dollar falls as Fed data, inflation indicators eyed
Gold and silver prices rose slightly in Asian trading, stabilizing after recording losses last week.
The Federal Reserve cut interest rates, marking the start of an easing cycle that could see rates fall by as much as 125 basis points this year. But the dollar’s overall losses were limited, as the Fed signaled that neutral interest rates would also be much higher than seen in the past.
More signals are expected from the central bank this week, with a group of bank officials set to speak in the coming days.
Inflation data – the Fed’s preferred gauge of inflation – is also due out next Friday, providing further clues about the Fed’s plans to cut interest rates.
Broader Asian currencies moved in a flat-to-low range. The Chinese yuan pair fell slightly, after the People’s Bank of China cut the 14-day repo rate to further ease monetary conditions and support economic growth.
The South Korean won rose 0.3%, while the Singapore dollar rose 0.2%.
The Indian rupee rose 0.1% but remained well below its recent record highs.