Asian currencies remained largely flat on Wednesday. Investors were cautious about U.S. trade policies under Donald Trump and upcoming inflation data. Meanwhile, the U.S. dollar stayed stable, awaiting key economic reports.
The Japanese yen saw a sharp decline after reaching a near two-month high. The USD/JPY pair rose by 0.8%, trading at 153.64 yen. Bank of Japan Governor Kazuo Ueda reaffirmed the 2% inflation target but appeared less hawkish than before. Additionally, uncertainties surrounding U.S. policies kept the yen under pressure. Higher U.S. Treasury yields also contributed to its decline.
Federal Reserve Chair Jerome Powell stated that rate cuts were not imminent due to persistent inflation and a resilient U.S. economy. As a result, most Asian currencies remained within a tight range. The Australian dollar (AUD/USD) increased slightly by 0.2%. The Chinese yuan (USD/CNY) hovered around 7.31 yuan, while the Singapore dollar (USD/SGD) and South Korean won (USD/KRW) saw little movement.
The Indian rupee (USD/INR) dropped by 0.5%. The decline followed reports that the Reserve Bank of India had intervened in currency markets to stabilize the rupee.
The U.S. dollar saw minor gains in Asian trading, recovering from previous losses. The increase followed Trump’s decision to impose 25% tariffs on aluminum and steel imports. Trump also signaled plans for further tariffs on key trading partners. These measures strengthened the greenback, as tariffs tend to favor the dollar in global trade.
Traders believe these tariffs could contribute to higher inflation in the U.S. If inflation remains high, the Federal Reserve may keep interest rates elevated. The upcoming U.S. Consumer Price Index (CPI) data is expected to remain stable compared to December. Analysts at Goldman Sachs predict core CPI could slightly exceed consensus expectations.
Investors are closely monitoring U.S. inflation data and potential policy shifts. The forex market is expected to react sharply based on economic reports and central bank decisions. Traders should stay informed about currency fluctuations to make well-informed trading decisions.
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Asian currencies remain flat as traders assess U.S. trade tariffs and interest rate policies. Discover the latest forex trends and analysis.
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