Asia FX upbeat, dollar at 4-mth low as markets look to 2024 rate cuts
Investing.com-- Most Asian currencies steadied after a recent rally on Friday, while the dollar languished at four-month lows as traders positioned for deeper-than-expected interest rate cuts by the Federal Reserve in 2024.
More stimulus measures in China also aided sentiment, as the People’s Bank of China injected 1.45 trillion yuan ($200 billion) into the economy through its medium-term lending facility.
But the move offered little support to the yuan, given that it signals that the PBOC will keep its loan prime rate at record lows next week. The currency traded sideways on Friday.
Economic data also offered some positive cues on China. Industrial production grew more than expected in November, although retail sales and fixed asset investment missed expectations.
Still, weakness in the dollar kept the yuan trading near a six-month high.
Broader Asian currencies advanced slightly, tracking a weaker dollar and as the prospect of lower U.S. interest rates drove investors into risk-driven, high-yield assets.
The Australian dollar — a major indicator of Asian risk sentiment- rose 0.3% to an over four-month high.
The Japanese yen steadied near a four-month high to the dollar, having appreciated sharply against the greenback in recent sessions. But further gains in the yen were uncertain, with the Bank of Japan expected to maintain its ultra-dovish stance in its final meeting for the year on the coming Tuesday.
Purchasing managers index data pointed to more weakness in the Japanese economy, with a preliminary reading for December showing a deeper-than-expected contraction in manufacturing activity.
Among the few outliers for the day, South Korea’s won fell 0.2% after a strong run this week, while the Indian rupee
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