Dollar strengthens on Asia FX due to changing market sentiment
2023.01.19 02:55
Dollar strengthens on Asia FX due to changing market sentiment
By Tiffany Smith
Budrigannews.com – The Japanese yen recovered most of its recent losses on speculation that the Bank of Japan may yet increase its yield control range, while the majority of Asian currencies retreated on Thursday as weak U.S. economic data raised fears of a potential recession.
With an increase of 0.5 percent to 128.29 against the US dollar, the Asian currency performed the best for the day.
After unexpectedly maintaining its current course of yield curve control, the currency plunged as much as 2.5% on Wednesday. The yen, on the other hand, surged back from intraday lows on the assumption that rising inflation will eventually force the central bank to alter its ultra-loose policy.
Takatoshi Ito, a professor at Columbia University who is thought to be a candidate to join the BOJ, said that hotter-than-expected inflation could eventually cause the central bank to widen the range of its benchmark bond yields this year, which would be good for the yen.
Japanese is expected to read at 4%, which is twice the BOJ’s annual target, on Friday.
As sentiment was hurt by weaker-than-expected U.S. economic data, which raised more and more concerns about a possible recession this year, Asian currencies in general fell. Given that investors will likely seek safer assets in the event of a global economic slowdown, capital flows into the region will likely slow, which is bad news for risk-driven Asian currencies.
The sank by 0.3 percent, while the led losses in Southeast Asia with a decline of 0.3 percent. Even though Gita Gopinath, the Deputy Director of the International Monetary Fund, stated that losses in the yuan could occur as early as the second quarter,
After data revealed that the country’s unexpectedly cooled from the record high in December, the was among the day’s worst performers, falling 0.5%. If this pattern continues, there will be less economic room for the Fed to keep raising interest rates.
By the beginning of February, the had not reacted to the news that it had fallen by 0.3%.
On Thursday, the and also retreated, taking varying cues from. Even though Fed officials almost unanimously called for higher interest rates, they differed on where the U.S. interest rate will reach its highest point.
A speech by is also the focus on Thursday.
