© Reuters.
Investing.com – Most Asian currencies fell on Friday and the dollar strengthened after Federal Reserve Chairman Jerome Powell reiterated the need for more rate hikes, while a larger-than-expected Bank of England rate hike also sparked concern.
Powell finished his work by stressing that US interest rates could rise at least twice more this year to contain soaring inflation.
His comments came after weaker than what markets had expected, adding to fears that major global central banks were far from finishing cycles of rate hikes, given stubborn levels of inflation.
Rising interest rates in the West bode ill for Asian currencies, as the gap between risky and low-risk returns narrows. Most of the territorial units have signed on to this concept.
It was among the worst performers of the day, down 0.7% along with heavy losses in commodity prices. Data released on Friday showed some improvement in Australian business activity through June, although the contraction continued.
The interest rate-sensitive index lost 0.3%, while the most declining across Southeast Asian currencies fell with a loss of 0.6%. However, regional trading volumes were somewhat muted due to the Chinese market holiday.
The Japanese yen held steady amid strong inflationary pressures on the Bank of Japan’s cautious bets
And the price stabilized after falling to its lowest level in more than six months against the dollar in overnight trading.
Data released on Friday showed slightly more-than-expected growth in the 12 months through May. But the core reading that excludes food and fuel prices jumped to a 42-year high during the month, suggesting that Japan’s core inflation remained hot.
And that trend is putting more pressure on policy tightening this year, although the bank recently reiterated that it had no plans to change its ultra-loose policy.
However, any possible tightening in Japanese monetary policy could help spur some strength in the yen, which has been under heavy pressure from the Bank of Japan.
The Japanese currency was also rapidly approaching levels that could warrant intervention in the currency markets by the government.
The dollar is strengthening, the Fed’s speakers are waiting
Concerns about rising interest rates in the West drove demand for dollars, adding 0.2% each in Asian trade.
Powell’s comments also sparked rushes for the dollar, as markets began to price in the roughly 75% chance that the Fed will raise interest rates further in July.
The focus is now on a slew of Fed speakers later in the day, and – for more signals on monetary policy.
Asia FX weakens, dollar strong after BoE hike, Powell comments By Investing.com
© Reuters.
Investing.com – Most Asian currencies fell on Friday and the dollar strengthened after Federal Reserve Chairman Jerome Powell reiterated the need for more rate hikes, while a larger-than-expected Bank of England rate hike also sparked concern.
Powell finished his work by stressing that US interest rates could rise at least twice more this year to contain soaring inflation.
His comments came after weaker than what markets had expected, adding to fears that major global central banks were far from finishing cycles of rate hikes, given stubborn levels of inflation.
Rising interest rates in the West bode ill for Asian currencies, as the gap between risky and low-risk returns narrows. Most of the territorial units have signed on to this concept.
It was among the worst performers of the day, down 0.7% along with heavy losses in commodity prices. Data released on Friday showed some improvement in Australian business activity through June, although the contraction continued.
The interest rate-sensitive index lost 0.3%, while the most declining across Southeast Asian currencies fell with a loss of 0.6%. However, regional trading volumes were somewhat muted due to the Chinese market holiday.
The Japanese yen held steady amid strong inflationary pressures on the Bank of Japan’s cautious bets
And the price stabilized after falling to its lowest level in more than six months against the dollar in overnight trading.
Data released on Friday showed slightly more-than-expected growth in the 12 months through May. But the core reading that excludes food and fuel prices jumped to a 42-year high during the month, suggesting that Japan’s core inflation remained hot.
And that trend is putting more pressure on policy tightening this year, although the bank recently reiterated that it had no plans to change its ultra-loose policy.
However, any possible tightening in Japanese monetary policy could help spur some strength in the yen, which has been under heavy pressure from the Bank of Japan.
The Japanese currency was also rapidly approaching levels that could warrant intervention in the currency markets by the government.
The dollar is strengthening, the Fed’s speakers are waiting
Concerns about rising interest rates in the West drove demand for dollars, adding 0.2% each in Asian trade.
Powell’s comments also sparked rushes for the dollar, as markets began to price in the roughly 75% chance that the Fed will raise interest rates further in July.
The focus is now on a slew of Fed speakers later in the day, and – for more signals on monetary policy.