Dollar continues to fall on Asia FX
2023.01.12 02:53
Dollar continues to fall on Asia FX
By Kristina Sobol
Budrigannews.com – The dollar fell in anticipation of data showing a further easing in U.S. consumer inflation on Thursday, while the Japanese yen rose sharply following a record-high current account surplus. The majority of Asian currencies gained ground on Thursday.
On Thursday, the dollar continued to fall against a basket of currencies, reaching close to its lowest level in more than seven months.
After data showed that Japan’s surplus increased significantly more than anticipated to a record high of 1.804 trillion, the jumped 0.7% to 131.61 against the dollar and was one of the best-performing Asian currencies for the day.
The strong reading was largely due to a record rise in returns on Japanese investments abroad, which helped offset the country’s expanding trade deficit. In addition, it suggests that, despite the challenges posed by worsening growth and rising inflation in 2022, the Japanese economy still has some strength.
was also helped by encouraging economic data, which showed a 0.2% increase and remained just below a five-month high. Chinese growth in December was slightly higher than anticipated, according to data, indicating that economic activity was beginning to pick up following the government’s relaxation of most COVID measures.
However, weakness in indicated that some aspects of the economy were still behind. After most restrictions were lifted, the country is dealing with a significant increase in COVID-19 cases.
After data showed that the country’s unexpectedly increased in November, the increased by 0.2 percent, while the was flat ahead of a reading on that is expected to have remained the same in December.
In anticipation of data that is anticipated to show that the United States retreated further in December, broad Asian currencies were slightly positive but were sitting on strong gains for the week.
The reading is likely to lead the Federal Reserve to adopt a less hawkish stance, which could weaken the dollar and provide significant relief to Asian currencies. Through 2022, regional markets were harmed by a sharp rise in interest rates, and they are waiting to see if this pattern could change in 2023.
In anticipation of the inflation data, the and both declined by approximately 0.1 percent and nearly 0.8 percent this week. Since the end of 2022, there have been a growing number of bets that U.S. inflation has reached its peak and that the Fed will follow suit. This has led to a sharp decline in the greenback.
Markets are cautious about whether interest rates will remain higher for a longer period of time, however, as inflation is still trending well above the Fed’s annual target range.
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