Asian currencies faced downward pressure on Tuesday – ForexNews.PRO
Asian currencies faced downward pressure on Tuesday, with the Japanese yen tumbling to a nine-month low as the U.S. dollar strengthened following advancements toward resolving the longest U.S. government shutdown in history.
A reduced likelihood of a U.S. interest rate cut in December further boosted demand for the dollar over regional currencies. Ongoing uncertainties regarding the U.S. economic outlook, exacerbated by a lack of official data during the shutdown, also influenced trading.
The dollar index and futures ticked up by 0.1% in Asian trading after the U.S. Senate passed a bill late Tuesday to unlock government funding and conclude the protracted shutdown. The bill is now with the House of Representatives, where the Republican majority is expected to approve it as early as Wednesday, paving the way for President Donald Trump’s signature to make it law.
Ending the historic 41-day shutdown is anticipated to enable the release of long-awaited U.S. economic data, providing markets with more insight into the health of the world’s largest economy.
In broader Asian currency markets, traders trimmed bets on a Federal Reserve rate cut in December, weighing on regional currencies. The Japanese yen was among the hardest hit, with the USD/JPY pair climbing 0.2% to 154.49 yen, a level not seen since early February. The yen’s decline was compounded by fading expectations of a December rate hike by the Bank of Japan.
The Chinese yuan’s USD/CNY pair edged up 0.1%, reflecting concerns over a cooling Chinese economy. Even mildly positive inflation data for October failed to lend meaningful support to the currency.
The Australian dollar, typically seen as a barometer for Asia-Pacific risk sentiment, saw its AUD/USD pair drop by 0.1%, despite a private survey reporting a sharp improvement in Australian consumer confidence.
South Korea’s won underperformed further, with its USD/KRW pair advancing 0.6%, while Singapore’s USD/SGD edged 0.1% higher. The Taiwan dollar remained unchanged, whereas India’s USD/INR pair posted slight gains.
Investor sentiment continued to shift away from expectations of a December rate cut by the Federal Reserve amid economic uncertainties. During its October meeting, the Fed dampened hopes for such a move, aligning with market adjustments. CME FedWatch data showed that traders have now priced in a 57.4% probability of a 25-basis-point cut in December, down from 61.9% recorded just a day earlier.
