Asian forex little changed, BOJ rate hike bets rise

Attention in Japan pivoted to Tokyo’s consumer-price numbers, which remained firmly above the BOJ’s 2% target and have bolstered expectations that the central bank may start raising rates again

Most Asian currencies were little changed on Friday, while investors turned focus to Tokyo inflation readings to assess the Bank of Japan’s policy outlook.

The won’s USD/KRW pair added 0.2%, while the Singapore dollar’s USD/SGD traded flat.

The Indian rupee’s USD/INR pair rose 0.1%, while the ringgit’s USD/MYR was steady.

In China, the yuan’s onshore pair USD/CNY was little changed.

The Australian dollar’s AUD/USD pair was also muted on Friday.

Attention in Japan pivoted to Tokyo’s consumer-price numbers, which remained firmly above the BOJ’s 2% target and have bolstered expectations that the central bank may start raising rates again.

Tokyo core inflation has been running near the high 2% range, reinforcing the case for at least a near-term tightening by the BOJ and underpinning a slightly firmer yen at times during the session.

The yen’s USD/JPY dropped 0.1%.

Meanwhile, the US Dollar Index was also muted in Asia hours, but was set for a sharp weekly decline. US Dollar Index Futures also traded unchanged as of 04:50 GMT.

Traders have sharply raised the odds of a 25-basis-point U.S. central bank rate cut at the Dec. 9-10 meeting to nearly 87% from around 40% a week earlier, a swing that has knocked the dollar lower and trimmed yields across the U.S. curve.

The shift was driven by benign U.S. data and some dovish comments from policymakers, although investors remain cautious due to a lack of economic data and conflicting signals from Fed officials.

Speculation over a possible appointment of Kevin Hassett to the U.S. central bank Chair role has added another layer to the market debate. A Hassett-led policy stance could tilt toward earlier easing and more explicit support for growth, a dynamic that would typically put further pressure on the dollar.