Most Asian currencies gain on Friday as expectations of a Federal Reserve rate cut grew. Traders are increasingly confident that the Fed will reduce rates by 25 basis points in December. This sentiment persisted even after strong U.S. economic data earlier in the week.
The Japanese yen saw notable gains, reaching a one-month high against the U.S. dollar. This movement followed inflation data from Tokyo, which exceeded expectations. The core consumer price index showed significant growth, reinforcing speculation about a potential Bank of Japan rate hike in December.
The USD/JPY pair declined nearly 1% on Friday and was set for a weekly drop of 3%. This trend highlights increasing investor interest in the yen amid stronger inflationary signals.
Other regional currencies also gained modestly, benefiting from the weakening dollar. For example:
In contrast, the Australian dollar (AUD/USD) increased by 0.3% on Friday but faced a 1% monthly loss.
The dollar index declined by 0.3% in Asian trade, marking a 1.6% drop for the week. While U.S. inflation data remained in line with expectations, traders focused on the Federal Reserve’s dovish stance. The Fed's recent meeting minutes highlighted policymakers’ willingness to ease rates further.
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Asian currencies gain on Friday as Fed rate cut bets grew. Learn how inflation data boosted the yen to a one-month high.
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