Title: Asian Currencies Hold Steady as U.S. Dollar Nears Seven-Month Low
Most Asian currencies maintained a tight range on Thursday following strong overnight gains, as U.S. consumer inflation data came in softer than expected, pushing the dollar towards a seven-month low. Positive economic indicators from Japan, Australia, and China further supported sentiment in regional markets.
The USD/JPY and USD/CNY pairs remained close to a seven-month low in Asian trade, with investors leaning towards a 25 basis point rate cut in September after CPI data showed a slight month-on-month increase.
The Japanese yen stabilized as Japan’s Q2 GDP exceeded expectations, fueled by growth in wages. This positive economic outlook could lead to further strength in the yen, which has already been on a strong rally against the dollar.
On the other hand, the Chinese yuan weakened amid mixed economic signals, with varying readings on consumer spending, inflation, and GDP growth. While some policy measures from Beijing have supported consumer spending, the overall Chinese economy still faces challenges.
The Australian dollar outperformed in Asia, rising on strong jobs data that indicated robust growth in the labor market. This could potentially support inflation and give the Reserve Bank of Australia room to maintain high interest rates or even consider further hikes to cool the labor sector.
Overall, the market holidays in South Korea and India kept broader Asian currencies muted, but the outlook remains positive with potential opportunities for investors to capitalize on the current economic trends in the region.