Asia FX rises as easing Fed fears put dollar at 3-month low
Investing.com-- Most Asian currencies advanced on Tuesday amid growing conviction that the Federal Reserve was done raising interest rates, which in turn put the dollar at a three-month low.
Still, gains in most regional currencies were limited as traders remained wary before a string of key economic readings this week. The PCE price index — the Fed’s preferred inflation gauge- will be a major point of focus this week.
The Japanese yen was among the better performers for the day, rising 0.3% as traders bet that the Bank of Japan will pivot away from its ultra-dovish stance in 2024. Sticky Japanese inflation data released last week furthered this notion.
Easing fears of the Fed helped the yen recover further from the 150 level. Focus is now on industrial production and retail sales readings from Japan, due later in the week.
The South Korean won rose 0.3%, while the Australian dollar added 0.2% tracking some strength in commodity prices. Data showed on Tuesday that Australian retail sales unexpectedly shrank in October, spurring some bets that inflation will trend lower in the coming months.
But Reserve Bank of Australia Governor Michele Bullock warned that Australian inflation was tracking global trends, and that the bank needed to be cautious in raising interest rates further.
The Indian rupee was flat around record lows, while the Singapore dollar and Philippine peso also tread water.
The dollar index and dollar index futures fell slightly in Asian trade, extending overnight losses after sinking to three-month lows at the start of the week.
The greenback was walloped by growing bets that the Fed will raise interest rates no more, and is likely to begin trimming rates in 2024.
But markets were now awaiting more
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