Asia FX dips, dollar near 6-mth peak before Fed, c.bank-heavy week

Investing.com-- Most Asian currencies fell on Monday, while the dollar steadied near six-month highs as markets hunkered down before several key central bank rate decisions this week, most notably the Federal Reserve.

Lingering concerns over China, particularly the country’s struggling property market, also kept broader sentiment subdued. Chinese police detained some employees of embattled developer China Evergrande Group (HK:3333), sparking concerns over renewed regulatory scrutiny towards the sector. 

The Chinese yuan fell 0.2%, shrugging off a stronger daily midpoint fix by the People’s Bank of China (PBOC). The PBOC is expected to keep its loan prime rates at record lows this Wednesday, as it struggles to meet a balance between supporting economic growth and stemming more yuan weakness. 

The dollar retained most of its recent strength, staying within sight of a six-month peak hit last week as investors positioned for more signals from the Fed. The dollar index and dollar index futures fell less than 0.1% each in Asian trade.

Concerns over a U.S. government shutdown, amid disagreements over defence spending between major Republican lawmakers, also kept markets on edge. 

Fed expected to pause, but rising inflation muddles rate outlook 

The U.S. central bank is widely expected to hold interest rates at the conclusion of a two-day meeting on Wednesday.

But the Fed is widely expected to maintain its hawkish stance, as rising oil prices fueled a resurgence in inflation over the past two months. The trend could elicit at least one more hike from the bank this year, and is also expected to give the bank more impetus to keep rates higher for longer. 

“Inflation concerns linger and economic resilience suggest the Fed will continue to signal the potential for a final hike even if we don’t think it carry through with it,” analysts at ING wrote in a note.

Asian markets are likely to see continued pressure on the prospect of higher interest rates, with a rate cut only expected by mid-2024, before the Presidential elections. 

While regional trading volumes were muted on account of a Japanese market holiday on Monday, some weak economic data also weighed on Asian sentiment. The Singapore dollar fell slightly as data showed the country’s non-oil exports- a bellwether for Southeast Asian trade- fell more than expected in August. 

The Australian dollar firmed slightly as Michele Bullock took over as governor of the Reserve Bank of Australia. 

BOJ pivot in focus, yen near 10-month low

The Japanese yen moved little in holiday trade on Monday, but was trading just above its weakest level since November 2022.

Markets are largely focused on a Bank of Japan meeting this Friday, amid some signals from top officials that the bank was considering a pivot away from its negative rate regime. 

Sticky inflation and increasing Japanese wages furthered this notion, with BOJ Governor Kazuo Ueda signaling that nearly a decade of negative interest rates had now provided sufficient levels of stimulus to the economy.

While any rate increases are likely to provide some support to the yen, the currency is still struggling amid declining carry trade interest and a widening gulf between local and U.S. interest rates. 

Begin trading today! Create an account by completing our form

Privacy Notice

At One Financial Markets we are committed to safeguarding your privacy.

Please see our Privacy Policy for details about what information is collected from you and why it is collected. We do not sell your information or use it other than as described in the Policy.

Please note that it is in our legitimate business interest to send you certain marketing emails from time to time. However, if you would prefer not to receive these you can opt-out by ticking the box below.

Alternatively, you can use the unsubscribe link at the bottom of the Demo account confirmation email or any subsequent emails we send.

By completing the form and downloading the platform you agree with the use of your personal information as detailed in the Policy.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70.8% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Back to top

Office network

One Financial Markets is the trading name of Axi Financial Services (UK) Ltd, a company registered in England with company number 6050593. Axi Financial Services (UK) Ltd is authorised and regulated by the Financial Conduct Authority in the UK (under firm reference number 466201) and the Financial Sector Conduct Authority in South Africa (with FSP number 45784).

The information on this site is not directed at residents of the United States, Belgium, Poland or any particular country outside the UK and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

www.onefinancialmarkets.com is owned and operated by Axi Financial Services (UK) Ltd.

Award winning broker
We have been presented with a number of awards that recognise the quality of our service and dedication to our clients :

Best FSA Regulated Broker
Saudi Money Expo

Best Education Product
Saudi Money Expo

Best Broker - Online Trading
IAIR Awards

Best Institutional Broker
Saudi Money Expo

Best FX Services Broker
CN Forex

Top International
FX Broker 2015

Saudi Money Expo

Broker of the Year
Online Trading – Middle East

IAIR Awards

Best Forex
Customer Service 2018

JFEX Awards

We accept the following payment methods: