Asia FX firms, yen at 8-mth peak as dollar retreats after presidential debate By Investing.com

Most Asian currencies rose on Wednesday as the dollar weakened in the wake of a heated U.S. presidential debate, with focus shifting to key inflation data due later in the day.

The Japanese yen was among the biggest beneficiaries of the trade, with safe-haven demand after the discussion sending the yen to its strongest levels since early January. The yen also benefited from somewhat hawkish comments from Bank of Japan officials.

Broader Asian currencies rose on Wednesday, seeing some relief from a weaker dollar, but regional markets are still reeling from sharp losses over the past week amid a slump in risk appetite.

Dollar falls after presidential debate; CPI in focus

The dollar and yen fell about 0.2% in Asian trading, with losses in the US currency coming in the wake of a fiery presidential debate between Kamala Harris and Donald Trump.

The debate has heightened expectations of a tight presidential race in 2024, which could be a major point of uncertainty for markets given the candidates’ opposing policy views. Both Harris and Trump have veered off-topic to engage in personal attacks on each other.

The dollar also fell ahead of key inflation data due later in the day, which is widely expected to provide further clues on interest rates.

The reading comes just a week before a monetary policy meeting, where investors expect the central bank to cut interest rates by at least 25 basis points.

Japanese yen hits 8-month high on safe-haven demand, hawkish BOJ comments

The yen was the best performer in Asia, with the pair falling 0.8% to 141.38 yen – its lowest since early January.

The currency benefited from some safe-haven trading, as uncertainty over the US election escalated after Tuesday’s debate.

But the main support for the yen was hawkish comments from Bank of Japan member Junko Nakagawa, who said the central bank would continue to raise interest rates if inflation moved in line with its expectations.

Nakagawa’s comments follow a series of hawkish signals from the Bank of Japan and come just a week before the central bank’s policy meeting. Investors are concerned about the possibility of another interest rate hike by the central bank, which hiked them by 15 basis points in late July.

Broader Asian currencies were higher, albeit slightly, as focus shifted to the upcoming US CPI reading.

The Chinese yuan pair fell 0.1%, but the yuan remained on the decline as US policymakers suggested imposing more trade restrictions on Beijing.

The South Korean won fell 0.3%, while the Singapore dollar fell 0.2%.

The Indian Rupee was steady at Rs 84, while the Australian Dollar remained steady after sliding from its highest levels in more than nine months during the past week.