Investing.com– Most Asian currencies kept to a tight range on Wednesday as the dollar steadied in anticipation of more cues on U.S. interest rates from the minutes of the Federal Reserve’s recent meeting.
The New Zealand dollar was an exception, rising sharply after the Reserve Bank of New Zealand struck a somewhat hawkish tone in its May meeting.
But cooling optimism over China and fears of high-for-longer U.S. interest rates kept most regional currencies moving in a tight range. Cautious overnight statements from Fed officials also kept sentiment subdued.
Kiwi rallies as RBNZ flags delay in rate cuts
The New Zealand dollar’s pair surged as much as 0.9% to an over two-month high on Wednesday, after the RBNZ flagged delays in any potential interest rate cuts due to sticky inflation.
The RBNZ kept its steady as widely expected. But it said that sticky inflation- particularly due to tight labor conditions and high service prices- was likely to delay any potential plans to cut rates. Bloomberg data showed traders pricing in cuts later in 2025.
Still, the RBNZ said that inflation was easing, albeit at a slower pace, and that price pressures were likely to fall within its 1% to 3% target range by end-2024.
Dollar steady, Asia FX muted with Fed minutes on tap
The and steadied in Asian trade on Wednesday after clocking some overnight gains. While the greenback was still nursing losses from last week, it recovered some lost ground this week as Fed officials kept up their warnings that more confidence was needed to begin trimming rates.
To this end, the , due later on Wednesday, were now awaited for more cues from the central bank.
Most Asian currencies tread water in anticipation of these cues. The Japanese yen’s pair showed persistent weakness in the yen, rising 0.1% and remaining well above 156 yen.
Soft trade data from Japan- which showed disappointing and for April, as well as a bigger-than-expected – also weighed on the yen.
Key Japanese data for May is due on Thursday.
The Chinese yuan’s pair moved little and remained in sight of a six-month high, as traders awaited more cues on Beijing’s stimulus measures and the Chinese economy.
The Australian dollar’s pair was flat, with for May also due on Thursday.
The South Korean won’s pair fell 0.1% as data showed a mild pick-up in inflation in April.
Market holidays in Singapore, Malaysia and Thailand kept tradings volumes dull across Southeast Asia.
