Investing.com–Most Asian currencies were slightly firmer on Tuesday, while the dollar retreated further from recent one-year highs amid conditions that the Federal Reserve will cut interest rates in December.
Regional markets were also braced this week for more economic indicators from China and Japan, as well as purchasing managers’ index readings from major economies.
Most Asian currencies were suffering heavy losses over the past week, as strong US inflation readings and less dovish statements from the Federal Reserve raised some uncertainty about how much interest rates will rise in the coming months. will fall
Donald Trump’s election victory also saw traders pile heavily into the dollar, pushing the greenback to a one-year high.
But and fell 0.1% each on Tuesday, retreating further from recent peaks as markets bet rates will fall in the short term.
Traders were seen pricing in a 59.8 percent chance of a 25 basis point cut in December, and a 40.2 percent chance rate of no change, it showed.
The notion provided some relief to Asian markets, although the long-term outlook for rates remains uncertain, especially during a Trump presidency.
The Chinese yuan was muted after the LPR decision.
The Chinese yuan advanced slightly on Tuesday, with the pair remaining within sight of recent three-month highs.
This week’s focus is on the People’s Bank of China’s interest rate decision, although economists expect the central bank to leave it unchanged on Wednesday.
The PBOC cut rates slightly more than expected in October, as it moved to further ease monetary conditions and support local economic growth. Wednesday’s decision also comes after several impressive stimulus measures from China, while recent economic readings have shown little improvement.
Japanese yen fragile ahead of CPI data
The Japanese yen fell 0.4% on Tuesday. But the pair hit near four-month lows in early November, as a stronger dollar hurt the yen.
Japanese data is due this Friday and is set to offer more insight into interest rates in the country. The reading also comes after broadly lower data for the third quarter, raising questions about how much more the Bank of Japan will need to raise interest rates.
Broader Asian currencies moved flat to a lower range. The Australian dollar rose 0.2 percent, as the Reserve Bank of Australia’s recent meeting reiterated the central bank’s plans to keep interest rates on hold for the foreseeable future.
The Singapore dollar pair was flat, as was the South Korean won pair.
The Indian rupee pair was flat after hitting a series of record highs above 84.6 in early November, and remains in sight of those peaks.
