© Reuters.
Investing.com – Most Asian currencies rose on Friday, while the dollar hit a 15-month low against a basket of currencies as weak inflation readings in the United States prompted investors to price in interest rate cuts this year.
Inflation and weakness readings released this week reinforced bets that the Federal Reserve was close to peaking interest rates, and that a July rate hike could be the last in the Fed’s current rate hike cycle.
This weighed on the dollar and stimulated trading in riskier assets, benefiting Asian currencies.
It rose 0.4%, hitting a two-month high against the dollar, while it rose 0.3% after preliminary data showed the island nation’s economy in the second quarter.
It rose 0.1%, amid some uncertainty about monetary policy after the government appointed Reserve Bank Deputy Governor Michele Bullock as the new central bank governor.
It increased by 0.2%, while it rose by 1.5% amid speculations regarding the intervention of the Central Bank of Malaysia in the currency market.
The dollar index fell below 100 amid bets on peak interest rates
And it recorded huge losses this week, as it fell below the 100 level for the first time since April 2022. The losses in the currency extended to Asian trading on Friday, as the two indices lost about 0.2% each.
Weak inflation readings fueled bets that US interest rates will peak at 5.50% in the current rate hike cycle, with the Fed widely expected to halt the cycle later this month.
Fed fund futures prices showed that markets were anticipating a high chance of no further hikes this year, given that recent payroll data also indicated some calm in the labor market.
But Fed officials cautioned that the bank will still maintain a data-driven approach to raising interest rates. Governor Christopher Waller said on Thursday that relative strength in the US economy still gives the bank more room to continue raising interest rates, and that he did not rule out the chance of at least two more hikes this year.
Chinese Yuan rises amid focus on stimulus talk and Q2 GDP
The index rose 0.3% on Friday, close to a one-month high after a series of stronger-than-expected midpoint reforms by the People’s Bank of China (PBOC).
But the outlook for the yuan remained negative, as a series of weak economic readings fueled concerns about the Chinese economy. People’s Bank of China officials said on Friday that the bank will roll out more stimulus to support growth.
The focus now, due on Monday, is to gauge how slow China’s economic recovery has been over the past three months.