Most Asian currencies kept to a tight range on Tuesday, while the dollar nursed losses as markets hunkered down before several key U.S. economic readings, starting with nonfarm payrolls later in the day.
The Indian rupee was a laggard performer, hitting its weakest ever level against the dollar as benign local inflation fueled bets on more interest rate cuts by the Reserve Bank of India.
Focus this week is also on a Bank of Japan meeting, with markets bracing for a potential rate hike after sticky inflation and weakness in the yen spurred hawkish signals from the central bank.
Broader risk appetite also remained on the backfoot amid a prolonged downturn in global stock markets, while the Federal Reserve kicked off its bond buying activities.
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Dollar nurses losses as payrolls, CPI data looms The dollar index and dollar index futures both fell slightly in Asian trade and remained close to a two-month low.
The dollar has been on a sustained decline since last week, after the Fed cut interest rates and said it will begin buying $40 billion worth of short-dated Treasuries per month. The latter presented a largely dovish outlook for monetary policy, given that the Fed’s buying is likely to increase market liquidity.
Focus is now squarely on upcoming U.S. economic readings for more cues on the world’s largest economy. Nonfarm payrolls for November are due later in the day, while CPI inflation is due on Thursday.
3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads. The labor market and inflation are the Fed’s biggest considerations for altering interest rates, with the bank having presented a largely data-driven approach on further easing. Overnight comments from Fed officials reinforced this notion.
Asia FX muted, Indian rupee hits record low Broader Asian currencies moved in a tight range, but were sitting on some gains over the past week as the dollar weakened on a dovish outlook from the Fed.
The Indian rupee was an outlier, with the USD/INR pair rising 0.2% to a record high of 91.083 rupees– the rupee’s weakest ever level against the dollar. The Indian currency marked an extended decline since last week following weak CPI inflation readings, which reinforced bets on more easing by the RBI.
Uncertainty over U.S. trade tariffs also weighed on the rupee, as Washington’s 50% levies remained in place with no trade deal in sight.
Other Asian currencies mostly dithered in anticipation of the U.S. data. The Chinese yuan’s USD/CNY pair fell less than 0.1%, while the Singapore dollar’s USD/SGD pair rose 0.1%.
The Australian dollar’s AUD/USD pair fell 0.1%, although the currency gained ground in recent sessions amid speculation that the Reserve Bank of Australia may raise interest rates next year, due to sticky inflation.
The Japanese yen’s USD/JPY pair fell 0.2% to a 11-day low, as investors braced for hawkish signals from the BOJ. The central bank had recently signaled it will consider raising interest rates in December, amid increasingly sticky local inflation.
