Investing.com — Most Asian currencies remained range-bound on Wednesday as the dollar held steady in anticipation of more signals on U.S. interest rates from the minutes of the Federal Reserve's latest meeting.
The New Zealand dollar was an exception, rising sharply after the Reserve Bank of New Zealand took a somewhat hawkish tone at its May meeting.
But cooling optimism about China and fears of higher US interest rates for longer kept most regional currencies moving in a narrow range. Dovish comments overnight from Federal Reserve officials also kept sentiment low.
The New Zealand dollar rises as the Reserve Bank of New Zealand signals a delay in interest rate cuts
The New Zealand dollar rose as much as 0.9% to the highest level in more than two months on Wednesday, after the Reserve Bank of New Zealand signaled delays in any potential interest rate cuts due to flat inflation.
The Reserve Bank of New Zealand held steady as widely expected. But he said stable inflation – particularly due to difficult business conditions and rising service prices – would likely delay any potential plans to cut interest rates. Traders are pricing in cuts later in 2025, Bloomberg data showed.
However, the Reserve Bank of New Zealand said inflation was falling, albeit at a slower pace, and that price pressures were likely to fall within the 1% to 3% target range by the end of 2024.
The dollar is steady, and the Asian currency market is silent with the release of the Federal Reserve meeting minutes
The dollar index held steady in Asian trade on Wednesday after recording some gains overnight. While the dollar was still suffering from losses last week, it regained some ground this week as Federal Reserve officials continued their warnings that more confidence is needed to start cutting interest rates.
To this end, further signals are now awaited from the central bank, scheduled for later on Wednesday.
Most Asian currencies are floating in the water in anticipation of these signals. The JPY pair showed continued weakness in the yen, rising 0.1% and remaining well above 156 yen.
Weak trade data from Japan – which showed a disappointing April, as well as larger-than-expected data – also weighed on the yen.
Key Japanese data for May is due on Thursday.
The Chinese yuan pair moved slightly and remained within sight of a six-month high, as traders awaited more signals on Beijing's stimulus measures and the Chinese economy.
The Australian dollar has stabilized, and May is also due on Thursday.
The South Korean won pair fell 0.1% as data showed a slight rise in inflation in April.
Market holidays in Singapore, Malaysia and Thailand kept trading volumes subdued across Southeast Asia.