Precise Investors Editorial Team
The yen’s USD/JPY pair hovered near 148 yen after rising sharply in overnight trade
Most Asian currencies moved in a tight range on Friday as the U.S. dollar recovered further from recent lows, with the yen moving little before the conclusion of a Bank of Japan policy meeting.
Most Asian currencies were headed for muted weekly performances, while the dollar was set for mild declines after the country’s central bank cut interest rates as expected, and signalled that it will cut rates further in the coming months.
But the bank’s rate cut outlook was not as dovish as some were expecting, which helped the country’s currency recover from an over three-year low.
The yen’s USD/JPY pair hovered near 148 yen after rising sharply in overnight trade.
The yen showed little reaction to data showing Japanese consumer price index inflation eased as expected in August, with core CPI also declining.
But underlying inflation remained well above the Bank of Japan’s (BOJ) 2% annual target, keeping some speculation over more interest rate hikes by the central bank in play.
The BOJ is widely expected to leave interest rates unchanged around 0.5% later in the day, with heightened political uncertainty, following Prime Minister Shigeru Ishiba’s unexpected resignation, expected to keep the bank in wait-and-see mode.
But focus will be on whether Governor Kazuo Ueda will reiterate his message of sticky inflation inviting more monetary tightening. Markets will also be watching for any signals on when the BOJ plans to begin offloading some of its exchange-traded fund holdings.
The dollar index and dollar index futures both advance nearly 0.1% in Asian trade, mildly extending overnight gains.
While the dollar had tumbled to its lowest levels since early-2022 before the U.S. central bank’s decision this week, it recovered steadily over the past two sessions.
The yuan’s USD/CNY pair rose marginally, remaining in sight of a recent 10-month low. Beijing announced plans to dole out more stimulus measures aimed at boosting private consumption, following a string of weak economic prints for August.
The Indian rupee’s USD/INR pair rose back above the 88-rupee level and in sight of record highs, with focus on trade dialogue between New Delhi and Washington over the latter’s steep trade tariffs.
The won’s USD/KRW pair gained 0.4%, while the Singapore dollar’s USD/SGD pair added 0.1%.
The Australian dollar’s AUD/USD pair was flat after hitting 10-month highs earlier.
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