Asia FX without movements the market is waiting for drive
2023.01.05 00:16
Asia FX without movements the market is waiting for drive
Budrigannews.com – While the Japanese yen was supported by reports that the Bank of Japan plans to raise its inflation forecasts, markets weighed mixed signals on monetary policy from the minutes of the Federal Reserve’s December meeting. As a result, the majority of Asian currencies moved little on Thursday.
The remained close to a seven-month high of 132.13 against the dollar, up 0.4 percent this week. that the Bank of Japan intends to raise its core inflation forecast in its quarterly projections due this month, despite the fact that the bank has no immediate plans to raise interest rates.
However, the yen has surged since the BoJ’s unexpectedly hawkish tone at its final meeting for 2022 in early December. The possibility of the bank eventually reversing its extremely loose monetary policy later this year is being priced in by the markets.
However, the course of U.S. monetary policy also has an impact on this unwinding. The Federal Reserve’s December meeting demonstrated that policymakers support a slower rate of interest rate increases but also want rates to stay higher for longer.
Asian currencies will experience less immediate pressure as a result of the possibility of fewer rate hikes. However, the majority of regional units will probably only see limited upside in the coming months if rates continue to rise.
Other readings indicated that the United States contracted for a second month in a row in December. The and also displayed a muted response to the minutes.
In recent sessions, the possibility of a U.S. recession and expectations of smaller near-term interest rate increases lowered sentiment toward the dollar. Markets are getting ready for a Fed meeting in February.
Markets are also awaiting Friday’s U.S. December data.
On Thursday, the,, and changed direction by less than 1%. After data showed that the met expectations in December, the bucked the trend and increased by 0.3%.
The increased after data revealed that, despite contracting once more in December, the country’s pace of contraction appeared to have slowed as several COVID restrictions were eased during the month.
Due to a significant increase in COVID-19 infections, the Chinese economy’s reopening is at the forefront of attention right now.
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