Home ForexArticles Asian currencies muted on further economic signals; Yen reaffirms before BOJ in sight By Investing.com

Asian currencies muted on further economic signals; Yen reaffirms before BOJ in sight By Investing.com

by SuperiorInvest

© Reuters.

Investing.com– Most Asian currencies were little moved on Monday, while the dollar fell ahead of a series of key economic signals due this week, with the Japanese yen strengthening from near two-month lows in anticipation of a meeting of the Bank of Japan.

Concerns about China also largely buoyed sentiment toward Asian markets, after the People’s Bank of China kept its benchmark index at record lows earlier in the session. The central bank has limited room to further ease policy as it struggles to strike a balance between supporting an economic recovery and avoiding further yuan weakness.

They moved little in domestic trade, while they crossed the level of 7.2 per dollar.

The dollar was hit by some profit-taking after a strong start to the year, and the outlook for the dollar looked strong as traders began to price in a greater possibility of higher and longer US interest rates. This notion weighed on most Asian currencies over the past few weeks.

The Japanese yen rises, the Bank of Japan is preparing to maintain an ultra-dovish policy

It was one of the hardest hit by high U.S. rate expectations but saw some strength on Monday, rising 0.2% from its weakest levels since late November.

Attention was mainly focused on Tuesday’s conclusion, where the central bank is expected to maintain negative interest rates and its yield curve control mechanisms.

Analysts expect this, especially amid increased uncertainty about the Japanese economy after the devastating earthquake earlier in the year.

Weakening inflation and slow wage growth are also expected to put little pressure on the Bank of Japan to consider tightening policy.

Beyond the BOJ meeting, attention this week is also focused on January, which is expected to reflect any inflationary impact from the New Year’s quake.

Asian currencies generally weakened as they racked up losses after a weak start to the year. It stabilized after falling to a two-month low, while it lost 0.2% and remained within sight of a nearly three-month low. South Korea’s report for the fourth quarter will also be released this Thursday.

Nearly two-month lows stabilized ahead of the key later this week.

They moved little, with local markets closed for a special holiday marking the inauguration of a controversial temple in northern India. But traders remained nervous about any possible communal violence arising from the takeover, as the issue is a major point of contention for Hindu-Muslim relations.

Dollar falls ahead of GDP and inflation data

He and both fell 0.1% in Asian trading, moving further away from recent one-month highs amid profit-taking.

The results showed markets were now pricing in a higher chance of no change to U.S. interest rates in March, a sharp turnaround from earlier expectations of a cut. This scenario bodes well for the dollar.

This week the focus is on more signs from the world’s largest economy, particularly those expected to show slower growth.

More inflation signals will also be coming this week, with data, which is the Federal Reserve’s preferred inflation gauge, due this Friday. Any sign of persistent inflation gives the bank more impetus to keep rates high longer.

The Federal Reserve is expected to do so when it meets next week.

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