Tuesday saw a little decline in the majority of Asian currencies as the dollar saw modest gains ahead of important U.S. inflation data that will likely influence the direction of monetary policy. Regional mood was also affected by worries about China, as data indicated that credit activity in the nation continued to decline through October. …
Tuesday saw a little decline in the majority of Asian currencies as the dollar saw modest gains ahead of important U.S. inflation data that will likely influence the direction of monetary policy. Regional mood was also affected by worries about China, as data indicated that credit activity in the nation continued to decline through October. The yuan dropped 0.1% as a result, approaching the 7.3 mark in relation to the dollar. This week also marks the due date for Chinese readings on fixed asset investment and industrial production. The Japanese yen was trading near its lowest level versus the US dollar in a year, but further declines in the value of the currency were restrained by the government’s repeated threats to interfere in the foreign exchange markets. On Monday, the yen had a dramatic turnaround from its recent declines, which sparked some conjecture that the government might have already stepped in to protect the currency. In the middle to late months of 2022, the government intervened with billions of dollars due to the currency’s weakness, which had brought it dangerously near to a 32-year low. Wider Asian currencies declined, although because of multiple local holidays, trade activity was a little lacklustre. The Australian dollar dropped 0.1% and the South Korean won lost 0.5%, respectively, following data that indicated continued declines in Australian consumer confidence in early November. The reading gives a poor picture of the Australian economy, mainly predicting that retail spending will decline over the busy holiday shopping season.
Following statistics indicating that Indian consumer price index (CPI) inflation increased more than anticipated in October, the Indian rupee moved sideways during the holiday trading session, closing in on all-time lows. However, the Reserve Bank of India had signalled an extended halt in its rate-hike cycle, thus the likelihood of future rate hikes by the bank remained low. The Malaysian ringgit lost 0.3%, and the Thai baht lost 0.4%, making it the poorest performing currency in Southeast Asia. Both the dollar index and dollar index futures increased by 0.1% during Asian trading, stabilising following the previous week’s surge from six-week lows. Due later in the day, U.S. CPI data for October was the main focus of the markets. After exceeding forecasts for the past two months in a row, the measurement is predicted to indicate slight cooling. The CPI report, which comes after multiple Fed officials cautioned that sticky inflation could lead to future rate hikes by the central bank, will be crucial for markets this week. Any indication of persistent inflation is expected to increase expectations on additional rate hikes by the Fed, which is good news for the dollar but bad news for Asian markets. Fears of increased U.S. interest rates caused the majority of Asian currencies to trade downward in 2023.
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