Investing.com — Most Asian currencies fell on Friday after the U.S. dollar hovered near 13-month highs, while the Japanese yen weakened after consumer inflation was slightly higher than expected. remained steady.
Currencies in the region have fallen in recent weeks, weighed down by a strong dollar and concerns about a slowdown in the pace of interest rate cuts by the US Federal Reserve. Traders were also nervous about how President-elect Donald Trump's policies would affect Asian countries, particularly China.
The yuan rose 0.1%, near a four-month high. The yuan has fallen as much as 1.8% against the dollar so far in November, as moderate signals on China's economic stimulus also weighed on domestic markets.
The Korean won and Singapore dollar are almost flat. Both currencies have each fallen nearly 2% against the dollar so far this month.
The Australian dollar is also flat, and the Indian rupee remains below its all-time high at around 84.5 rupees.
Dollar stabilizes at 1-year peak
It rose slightly to 107.06 after hitting a one-year high of 107.15 on Thursday. Asian trade also stabilized near its 13-month peak.
Traders have backed off expectations that the Fed will cut interest rates in December after recent indicators, particularly last week's solid inflation numbers and Thursday's better-than-expected weekly new jobless claims.
Speculation over President Trump's policies that could reignite inflation and limit the Fed's ability to cut interest rates in the long run is also supporting the dollar.
Traders are cautious about the outlook for the Fed's interest rate path, pricing in a 61.3% chance of a 25 basis point cut at its December meeting, down from 72.2% a week ago, according to the Fed.
Federal Reserve Chairman Jerome Powell recently said the central bank was in no hurry to cut interest rates, citing the resilience of the economy.
Last night's labor figures showed the weekly preliminary figures unexpectedly fell to a seven-month low, while laid-off workers are also taking longer to find new jobs. indicated that the unemployment rate may rise this month.
The Fed's preferred inflation measure, the PCE index, is scheduled to be released next Friday and is expected to provide further clues about interest rates.
Japanese yen holds firm after CPI beats expectations
The Japanese yen fell 0.1% after falling 0.6% in the previous session. However, the currency continued to depreciate significantly against the dollar from October to November.
Japan's inflation rate was slightly above expectations in October, with core indicators above the central bank's annual target range, and bets on further interest rate hikes by the Bank of Japan (BOJ) continued. Analysts expect the Bank of Japan to raise interest rates in December, according to a Reuters poll on Friday.
The central bank has raised interest rates twice so far in 2024, but persistent inflation is expected to lead to further rate hikes from the Bank of Japan.
Bank of Japan Governor Kazuo Ueda said on Thursday that he would scrutinize data ahead of next month's interest rate review and “seriously” consider the impact that movements in the yen could have on the economic and price outlook.
Other data showed Japan's business activity contracted for the fifth straight month in November as demand from private companies stagnated over the period.
