Home ForexArticles Asian currencies headed for weekly losses; Dollar Strengthens on Doubts Over First Rate Cuts By Investing.com

Asian currencies headed for weekly losses; Dollar Strengthens on Doubts Over First Rate Cuts By Investing.com

by SuperiorInvest

© Reuters.

Investing.com– Most Asian currencies were little moved on Friday but headed for weekly losses, while the dollar hovered near one-month highs amid growing doubts the Federal Reserve will cut interest rates. at the beginning of this year.

It was the country hardest hit by concerns about higher interest rates for the longest time, and also had the worst performance in Asia this week. The yen fell 0.1% on Friday and is expected to lose 2.3% this week.

Data on Friday showed that Japanese inflation (CPI) fell in December to its lowest level since June 2022, prompting the Bank of Japan to largely maintain its ultra-dovish policy as…

Chinese yuan hit by economic jitters, but People’s Bank of China action limits losses

Broader Asian currencies were also hit by growing concerns about China, after the region’s largest economy grew less than expected in the . Growth by 2023 is also a government target of 5%.

Losses in the country were limited by a series of sharp adjustments at the midpoint by the People’s Bank of China. The People’s Bank of China was also seen selling dollars on the open market to support the Chinese currency.

The yuan was expected to lose 0.4% this week, its third consecutive week of declines. The currency sank to a nearly two-month low earlier in the week.

The People’s Bank of China is also expected to keep its benchmark index at record lows this Monday.

China’s weakness spread to other currencies. It rose 0.2% on Friday, but was down 1.6% for the week after falling to a one-month low.

It was headed for a 1.8% weekly drop, while it was headed for a 0.8% weekly drop following an unexpected drop in the country’s key currency.

Most Asian currencies were off to a weak start in 2024 as signs of persistent inflation and labor market strength in the United States led to growing doubts about early interest rate cuts by the Federal Reserve. Regional currencies largely reversed all gains made through December, when markets began pricing in subsequent and potentially smaller U.S. rate cuts in 2024.

Dollar Heads For Strong Weekly Gains as Bets on March Cuts Recede

The y fell slightly in Asian trading, but remained near the more than one-month high reached earlier this week. Both were also expected to finish the week between 0.9% and 1% higher.

Strong data and a series of hawkish comments from Fed officials this week raised growing doubts that the Fed will begin cutting rates as soon as March 2024.

Traders were also seen sharply reducing their bets on a cut in March, according to the . Traders were now estimating a 51.9% chance of a cut in March, well below the 68.3% seen last week.

Recent signs of resilience in the US economy give the Federal Reserve enough room to keep rates high for longer. The bank is also unlikely to budge on interest rates until inflation is within its 2% annual target, with December’s target showing little progress.

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