Asia FX retakes some ground as dollar retreats before more Fed cues
Investing.com-- Most Asian currencies rose on Wednesday, seeing some relief as the dollar retreated in anticipation of more cues from the Federal Reserve on the path of interest rates.
Regional units were still nursing steep losses in recent sessions as waning expectations of early interest rate cuts by the Fed saw the dollar race to three-month highs.
But the greenback retreated significantly from recent highs this week, offering some relief to Asian markets.
The dollar index and dollar index futures both fell about 0.1% each in Asian trade, with investors collecting some profits in the greenback before a barrage of Fed cues this week.
The minutes of the Fed’s late-January meeting are due later on Wednesday, after the bank kept rates steady and largely downplayed expectations of early interest rate cuts.
Beyond the minutes, a slew of Fed officials are also set to speak this week, including Raphael Bostic and Michelle Bowman later on Wednesday.
The Chinese yuan rose 0.1% on Wednesday, also benefiting from some optimism over a potential economic recovery in Asia’s largest economy.
Data showing increased consumer spending and travel demand during the Lunar New Year holiday drove up hopes over a bigger recovery in consumption- which is a key driver of the Chinese economy.
The People’s Bank of China also cut its five-year loan prime rate by a bigger-than-expected margin on Tuesday, pointing to more support for the Chinese economy.
While lower rates bode poorly for the yuan, losses in the currency were stemmed by government intervention in currency markets. Media reports showed several Chinese state-owned banks buying yuan and selling dollars on the open market.
Other Asian currencies trended higher. The Japanese yen
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