© Reuters.
Investing.com – Most Asian currencies moved slightly on Wednesday, while the dollar stabilized from recent gains as markets await fresh signals on monetary policy from the May Federal Reserve meeting minutes.
The day was a head starter, falling 1.3% to a three-week low after interest rates rose as expected, but signaled a potential pause in the nearly two-year rate hike cycle.
This, along with signs of worsening economic conditions in the country, assumes a weak outlook for the New Zealander, as the domestic economy struggles with rising inflation and slowing growth in its largest trading partners.
The broader Asian currencies moved little but were taking losses this week as sentiment also remained constrained by fears of a US debt default. And Democratic and Republican lawmakers are giving little indication of when a deal will be reached to raise the debt ceiling, as talks dragged on ahead of the early June deadline for a default.
This led to markets seeking safe haven in the dollar, with it holding steady on Wednesday after gains made overnight.
The focus is also squarely on, later in the day, any signals about when the central bank plans to pause the rate hike cycle. But with higher US interest rates likely to continue for longer, Asian currencies are poised for further pressure.
This was seen largely with losses in the US, which hovered near six-month lows after falling below the key $7 level last week.
Fears of deteriorating relations between Beijing and Washington have also affected, after China unexpectedly blocked domestic sales of US chipmaker Micron Technology (NASDAQ:) due to security concerns.
Beijing also criticized the recent trade deal between the United States and Taiwan, which saw a 0.5% drop for the week.
Concerns about China also caused a 0.2% decline, given the country’s heavy reliance on the mainland as an export destination.
It rose 0.1% on Wednesday, but traded at six-month lows for the dollar, as the prospect of continued ultra-loose monetary conditions in the country weighed on the yen’s appeal.
It rose 0.2%, but was trading near a two-month low as sentiment was shaken by the Reserve Bank withdrawing the 2,000 rupee note, which markets fear could cause economic turmoil in the country.
