Investing.com – Most Asian currencies held in tight ranges on Thursday, while the dollar steadied amid uncertainty over U.S. interest rates ahead of key economic signals in the coming days.
The Japanese yen suffered extended losses, with the pair hitting new 34-year highs ahead of Friday’s Bank of Japan meeting. The currency pair also broke through a level that many expected would have prompted intervention from the Japanese government.
USDJPY breaks the intervention level; The Bank of Japan was waiting
USDJPY broke above 155 in overnight trade and stabilized at 155.44 during Asian trade.
Traders expected 155 to be the threshold for the Japanese government to intervene in the foreign exchange market. But officials only continued their verbal warnings, while the USDJPY’s steady rise indicated that no action had been taken.
The yen’s weakness has brought the upcoming events into focus.
The central bank is expected to keep interest rates unchanged on Friday after making a historic rate hike in March.
But the yen’s recent weakness, coupled with expectations of higher wages and more resilient inflation, has traders wary of any aggressive signals from the Bank of Japan.
The Bank of Japan could potentially raise its inflation forecast and repeat plans to raise interest rates further this year, a scenario that could potentially boost the yen.
But how much the yen would recover remained unclear, with the yen’s biggest pressure point – concerns about higher, longer-term US interest rates – still remaining in play.
The dollar is stabilizing, more exchange rate signals are expected
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Asian trade stabilized after a slight recovery in overnight trade.
The US dollar remained close to more than five-month highs reached last week as traders gradually shrugged off expectations that the Federal Reserve would cut interest rates soon.
Economic data due this week should have provided more clues about interest rate movements. First-quarter U.S. data will be released later on Thursday and will show how resilient the U.S. economy was at the start of 2024.
The data – the Fed’s preferred inflation indicator – due out on Friday will be watched more closely.
The wait for data delayed most Asian currencies. The South Korean won was little changed despite the economy growing much more than expected in the first quarter.
The Singapore dollar fell 0.1%, while the Chinese yuan treaded water amid a series of strong decisions by the People’s Bank.
The Indian rupee pair hovered below record highs hit earlier in April, with traders remaining wary of the currency as India’s 2024 general elections are set to begin this week.