Asian currencies strengthen as Dollar slips on Fed cut bets
The yen strengthened after comments from U.S. Treasury Secretary Scott Bessent, who said Japan's central bank was falling behind in tackling inflation and would need to raise rates. His remarks stood in contrast to BOJ Governor Kazuo Ueda, who has been more cautious about moving too quickly. Still, traders believe the BOJ could hike rates again in September, which would be its fourth increase since early 2024.
By mid-morning in Asia, the dollar slipped 0.5% against the yen to trade around 146.72. The move came as the dollar weakened more broadly, with traders pricing in an almost certain chance of a 25-basis-point Fed cut next month. Recent U.S. data showing cooling inflation and slower jobs growth has fueled those expectations.
Other Asian currencies also advanced. The Chinese yuan edged higher, helped by news that the U.S. and China extended their trade truce by 90 days. Markets are now watching for key Chinese data on industrial output and retail sales, due Friday.
The Australian dollar inched up after labor market figures showed slower-than-expected job growth in July, adding to speculation that the Reserve Bank of Australia could cut rates. The South Korean won gained 0.4%, while the Singapore dollar was steady.
The Indian rupee held its ground after dropping sharply last week. However, traders remain cautious as the U.S. considers imposing steep 50% tariffs on Indian goods in response to its purchases of Russian oil.
While the softer dollar and improving risk sentiment supported Asian markets, gains were tempered by trade concerns and political uncertainties. All eyes are now on upcoming economic data and a planned meeting between Donald Trump and Vladimir Putin in Alaska, where oil trade and the Ukraine war are expected to be discussed.
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