Asia FX rally stalls on China weakness, dollar steadies before PCE data
Investing.com-- Most Asian currencies kept to a tight range on Thursday tracking weak economic signals from China, while the dollar steadied from recent losses as markets awaited a key inflation reading due later in the day.
The Chinese yuan strengthened slightly after a stronger midpoint fix from the People’s Bank of China. But purchasing managers index data showed a sustained decline in manufacturing activity, as China’s biggest economic engines struggled with worsening overseas demand.
The reading highlighted continued weakness in the Chinese economy, as a post-COVID rebound failed to materialize.
But steady PBOC support, coupled with a less hawkish outlook for the Federal Reserve saw the yuan set for a 2.6% gain in November. The currency also remained close to a five-month high against the dollar.
Other Asian units moved little on Thursday as a weeks-long rally in regional currency markets now appeared to be winding down. But most regional units were set for stellar gains in November, as markets grew convinced that the Fed will raise interest rates no further.
The Japanese yen rose 0.1%, taking little support from data that showed retail sales grew less than expected in October, while industrial production remained muted.
Still, the yen marked a sharp recovery from near 33-year lows in November, and was set to rise 3% in the month, its best monthly gain since November 2022, when the government had intervened in currency markets.
The Australian dollar rose 0.4%, buoyed by data showing a rebound in building approvals through October. But Australian capital expenditure remained weak in the third quarter.
The Australian dollar was set to nearly 5% in November, and was trading close to a four-month high.
The South
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