The dollar made gains in Asia on Friday, buoyed by a weakening pound and yen. It came amid disappointing trade data from China, which negatively impacted regional markets. The dollar index, which gauges the currency’s strength against six others, increased by 0.1% to 99.796. After losing some ground earlier in the week due to rising anticipations of interest rate cuts, the dollar seemed to regain its footing. Nonetheless, the index remains stuck in the same trading range it has occupied since August.
Christopher Wong, a currency strategist at OCBC in Singapore, remarked that the market appears to be navigating somewhat blindly, relying solely on private sector data. He noted that current market correlations have lessened. “There’s not a clear trend for the dollar right now; Asian currencies are following broader market trends,” he added.
The delay in U.S. government data due to a shutdown has left traders looking at private sector figures instead, which showed a drop in government and retail jobs in October. Layoffs have surged, driven by cost-cutting measures and the growing use of artificial intelligence.
Despite traders nudging higher their expectations for a rate cut, Chicago Fed President Austan Goolsby expressed caution, stating that the absence of official inflation data amidst the government shutdown has made him more hesitant to consider further cuts. He advised taking a cautious approach when the outlook is uncertain.
According to CME Group’s FedWatch tool, trading in federal funds futures indicates a 70% likelihood of a rate cut at the upcoming Federal Reserve meeting on December 10, which is an increase from the 62% chance noted just a day prior. Against the yen, the dollar climbed 0.2% to 153.27.
In related economic news, Japan reported a 1.8% year-over-year increase in household spending for September, falling short of the market’s anticipated 2.5% growth. Meanwhile, the Australian dollar remained steady at $0.64785.
The New Zealand dollar dipped by 0.2% to $0.5620, and the pound slipped 0.2% to $1.31195, a day after the Bank of England decided to keep interest rates unchanged in a close 5-4 vote. UK Chancellor Rachel Reeves mentioned a possible rise in personal taxes as a significant measure she’s preparing for the upcoming budget, according to a report by The Times. The euro, for its part, fell by 0.1% to $1.1535, slightly retreating from a one-week high.
