Investing.com — Most Asian currencies stayed within a tight range on Wednesday, while the dollar held steady ahead of more signals on U.S. yields from the minutes of the recent Federal Reserve meeting.
The New Zealand dollar was an exception, rising sharply after the Reserve Bank of New Zealand took a somewhat hawkish tone at its May meeting.
But declining optimism about China and fears of prolonged high US interest rates kept most regional currencies moving within a tight range. Cautious statements from Fed officials also tempered sentiment.
Kiwi recovers as RBNZ signals delay in rate cuts
The New Zealand dollar pair rose as much as 0.9% to a more than two-month high on Wednesday after the RBNZ noted delays in any rate cuts due to persistent inflation.
The RBNZ remained stable, as widely expected. But it said persistent inflation – mainly due to tight labor conditions and high service prices – would likely delay any possible plans to cut rates. Bloomberg data shows traders are pricing in cuts later in 2025.
Still, the RBNZ said inflation was easing, albeit at a slower pace, and price pressures were likely to fall within the target range of 1% to 3% by the end of 2024.
Dollar Stable, Asia FX Muted with Fed Minutes on Tap
Trading in Asia was steady on Wednesday after some overnight gains. While still reeling from losses from last week, the dollar recovered some lost ground this week as Fed officials continued to warn that more confidence was needed to start cutting rates.
To this end, we were now waiting for more signals from the central bank, which would appear later on Wednesday.
Most Asian currencies are moving ahead in anticipation of these signals. The Japanese yen pair showed continued yen weakness, rising 0.1% and remaining well above 156 yen.
Soft trade data from Japan, which was disappointing and larger than expected for April, also weighed on the yen.
The most important Japanese figures for May will be released on Thursday.
The Chinese yuan pair moved little and remained within sight of a six-month high as traders waited for more signals on Beijing’s stimulus measures and the Chinese economy.
The Australian dollar pair was flat, with May also on Thursday.
The South Korean won pair fell 0.1% after data showed inflation rose slightly in April.
Market holidays in Singapore, Malaysia and Thailand left trading volumes dull in Southeast Asia.
