Investing.com– Most Asian currencies weakened on Thursday, while the dollar rose to a one-year high on data showing continued tightness in U.S. inflation, with attention now turning to the upcoming speech by the Chairman of the Federal Reserve, Jerome Powell.
Sentiment towards regional markets remained weak after China’s recent stimulus measures disappointed, while the prospect of greater US protectionism under President Donald Trump also kept traders biased towards the dollar.
Most Asian currencies suffered heavy losses over the past week in this trade, with the Japanese yen and Chinese yuan among the hardest hit.
Dollar Hits One-Year High After CPI Data; Powell in focus
He and both rose nearly 0.2% in Asian trading, extending strong overnight gains.
Consumer price index data is in line with expectations for October. But the rate still increased from the previous month, although it remained rigid and well above the Federal Reserve’s 2% annual target.
While the reading spurred bets that the Federal Reserve will continue to cut interest rates by 25 basis points in December, the long-term outlook for rates became more uncertain.
Trump’s election also raised long-term expectations for rates, given the bets on more expansionary policies during his second term.
Attention now turned to an upcoming speech by , later on Thursday, for more clues on interest rates. Powell had reiterated the Fed’s data-driven approach to future easing after the central bank cut rates by 25 basis points last week.
Australian dollar at three-month lows after RBA comments and employment data
The Australian dollar weakened slightly on Thursday with the pair falling 0.1% to its three-month low.
Reserve Bank of Australia Governor Michele Bullock said interest rates were unlikely to rise further but would remain stable until the bank was confident inflation was declining further.
Bullock’s comments were accompanied by data showing Australia’s economy cooled in October after six straight months of strong growth. A weaker labor market weighed on expectations for a further cooling of inflation, with analysts predicting the RBA will begin cutting rates from the first quarter of 2025.
Asian currencies generally weakened on Thursday and suffered heavy losses in recent sessions. The Japanese yen pair rose 0.3% to 155.85 yen, a more than three-month high. The yen was also close to the levels that had prompted the government’s latest intervention in the currency market.
The Chinese yuan pair rose 0.3% and hit a more than three-month high as the yuan was hit by China’s disappointing stimulus measures. Sentiment towards China was also strained by the prospect of high US trade tariffs against the country under the Trump administration.
The South Korean won pair rose 0.1%, while the Singapore dollar pair rose 0.2%.
The Indian rupee pair stabilized after hitting a record high of over Rs 84.6 this week.