Dollar hits Low on Asia FX
2023.01.13 02:36
Dollar hits Low on Asia FX
By Ray Johnson
Budrigannews.com – The prospect of an eventual shift in the hawkish stance of the Federal Reserve, which also pushed the dollar to a seven-month low, pushed the majority of Asian currencies higher on Friday and pointed to steep weekly gains.
The was one of the best-performing currencies this week as rising in the country drove up bets that the will eventually tighten its ultra-loose policy this year. It rose by 0.1% against the dollar to an over seven-month high of 129.14.
In addition, data indicating a significant surplus in November indicated that, despite broader challenges, some aspects of the Japanese economy remained robust. This week, the yen was expected to rise 2.2%.
As data showing a slight improvement in (CPI) inflation through December indicated that the relaxation of anti-COVID curbs was facilitating some recovery in economic activity, the rose 0.2 percent and remained just below a six-month high to the dollar. This week, the currency was expected to rise by 1.6%.
China’s also improved more than anticipated, according to Friday’s data. However, analysts have expressed concern that a larger economic recovery may be delayed given that the nation is currently dealing with the worst COVID-19 outbreak in its history.
Strong weekly gains were also anticipated for broader Asian currencies. With a gain of nearly 3%, the region’s best performer, the was expected to rise by 1.4% after data showed that remained largely constant through December.
Despite the fact that it signaled that it will likely maintain rates in the months to come, the was an exception for the day, falling 0.4% following the anticipated increase in interest rates.
This week, the dollar fell to a level against a basket of currencies that hasn’t been seen in seven months. The and were on track for a decline of 1.6%, their worst performance since early November.
Thursday’s data showed that the United States eased in December as expected, likely signaling a possible tapering of the Federal Reserve’s hawkish rhetoric.
According to the CME Group’s Fedwatch tool, investors are now pricing in a rate hike by the central bank in February of only 25 basis points. Before the Federal Reserve begins loosening policy, it is also anticipated that U.S. interest rates will reach a peak around 5%.
Markets remain unsure about the immediate course of U.S. monetary policy, despite the fact that consumer inflation in the United States is trending significantly higher than the Fed’s target range.
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