© Reuters.
By Amber Warrick
Investing.com — The US dollar traded near two-month lows on Thursday, as weaker-than-expected inflation data and fears of a recession caused markets to price in a higher probability that the Federal Reserve would halt its rate hike cycle.
But Asian currencies posted limited gains on Thursday as fears of slowing economic growth kept markets cautious on most risk-driven currencies.
The y was little moved in Asian trading, after falling to nearly a two-month low in overnight trading. The data showed that US inflation (CPI) declined more than expected in March, although inflation still remained stubbornly high.
The data triggered increased bets that the Fed will raise rates once more before announcing a pause in June, in a scenario that bodes well for high-risk and rate-sensitive assets.
San Francisco Fed President Mary Daly also raised the possibility of the Fed raising rates less, given that the central bank raised interest rates sharply from near zero levels over the past year.
But optimism about slowing rate hikes was dashed by the , which showed policymakers wary of a mild recession later this year.
It fell 0.1% after gaining little in overnight trade, while holding steady, receiving little support from data showing an unexpected rally through March. The reading could herald better trends for China’s massive manufacturing sector, especially if overseas demand improves further.
The and the were among the few outliers on the day, up 0.6% and 0.7%, respectively, as they were among the hardest hit by a dollar rise through 2022.
It also rose 0.3%, as a substantially stronger-than-expected reading prompted renewed bets that the Reserve Bank is not done with its rate-raising cycle yet.
It remained flat as data showed local declined more than expected in March. The reading gave more credence to the recent decision to pause further rate hikes as it moves to strike a balance between curbing inflation and facilitating economic growth.
Indian Y also grew more than expected in February, recent data showed.