HomeForexAsian currencies weaken, while the dollar remains stable after the Fed suggests...

Asian currencies weaken, while the dollar remains stable after the Fed suggests no rush to lower rates.

Asian Currencies Fall as Dollar Gains Momentum

Investing.com– Most Asian currencies retreated on Thursday, while the dollar stemmed recent losses as a slew of signals from the Federal Reserve showed that the central bank was likely to keep interest rates high in the near-term.

Most Asian currencies took a step back on Thursday, while the dollar regained some of its recent losses. This shift in momentum followed indications from the Federal Reserve that suggested the central bank would maintain high interest rates in the near future.

Weak PMI Readings Add to Dollar’s Favor

Weak purchasing managers index (PMI) readings from Australia and Japan also saw Asian traders favor the dollar, as business activity in both countries slowed through February.

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Additionally, weak purchasing managers index (PMI) readings from Australia and Japan further tilted the scale in favor of the dollar, as business activities in these countries slowed down in February.

Dollar Rebounds After Fed’s Rate Outlook

The dollar showed resilience in Asian trade after retreating from three-month highs this week, following the Federal Reserve’s affirmation of its stance on interest rates.

The dollar managed to bounce back in Asian trade after dropping from its three-month high earlier in the week, thanks to the Federal Reserve’s reiteration of its interest rate outlook.

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Fed’s Hawkish Stance Impacts Rate Cut Expectations

The Federal Reserve’s communication also revealed its reluctance to reduce interest rates in the near-term. This stance was echoed by several Fed officials throughout the week, expressing concerns over persistent inflation.

The Federal Reserve’s hawkish stance impacted expectations for rate cuts in May and potentially June, leading to a narrowing gap between risky and low-risk yields, which in turn negatively affected Asian currencies.

Impact on Asian Currencies

Most Asian currencies showed weakness on Thursday, with the yuan falling 0.1%, slipping back towards the 7.2 level, as doubts persisted over an economic rebound in the country.

Most Asian currencies trended weaker on Thursday, with the yuan slipping back towards the 7.2 level, reflecting doubts about an economic rebound in China.

Japanese Yen and Australian Dollar Affected by Weak PMIs

The Japanese yen weakened by 0.1% and was back above the 150 level to the dollar, while the Australian dollar remained flat after showing sustained weakness in business activity.

The Japanese yen weakened by 0.1% against the dollar, and the Australian dollar remained flat due to sustained weakness in business activity.

Broader Asian Currencies

Broader Asian currencies moved in a flat-to-low range, with the Thai baht treading water and the Singapore dollar rising 0.2% after the central bank left interest rates unchanged.

Broader Asian currencies showed minimal movement, with the Thai baht treading water and the Singapore dollar rising 0.2% after the central bank decided to keep interest rates unchanged.

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