Asian Currencies Weaken as U.S. Dollar Surges
Hotter U.S. Inflation Data Strengthens Dollar
Most Asian currencies experienced a decline on Thursday due to hotter-than-expected U.S. inflation data, which pushed the dollar to a five-month high. The Japanese yen’s weakness raised concerns about potential intervention in the markets.
Traders Rethink June Interest Rate Cut
Traders swiftly adjusted their expectations for a June interest rate cut by the Federal Reserve after the U.S. inflation data. This shift added pressure to Asian currency markets in the near term.
Chinese Inflation Data Adds to Sentiment
Weaker inflation readings from China also impacted market sentiment, with a deflationary trend persisting in the region’s largest economy.
Dollar Strengthens, Rate Cut Expectations Diminish
The dollar and yen saw slight movements in Asian trading, with the dollar benefitting from robust inflation data. Expectations for a June rate cut faded as traders priced in higher U.S. interest rates.
Yen Intervention Concerns Amid USDJPY Surge
The Japanese yen strengthened briefly, with the USDJPY pair hitting a 34-year high. However, fears of currency market intervention by the Japanese government limited further gains.
Chinese Inflation Trends Impact USDCNY Pair
The Chinese yuan remained steady, with the USDCNY pair hovering near a five-month peak. Strong data from the People’s Bank limited gains, reflecting a sustained deflationary trend in China.
Broader Asian Currency Trends
Other Asian currencies maintained a flat-to-low range, with the Australian dollar and South Korean won pairs showing mixed movements. The Singapore dollar and Indian rupee pairs also saw minimal fluctuations.
