Asian FX Steadies, Yen Near 6‑Week Low

Asian FX Steadies, Yen Near 6‑Week Low

The Asian foreign‑exchange market steadied on Wednesday after a sharp decline in the previous session, as the U.S. dollar index (DXY) held near a two‑week high of 102.22 by 22:25 ET (03:25 GMT) following a 0.6% rise on Tuesday.

U.S. consumer‑price data showed a 0.4% month‑on‑month increase in October, exceeding the consensus forecast of 0.3%, reinforcing concerns that inflationary pressures remain elevated. Fed Governor Christopher Waller indicated he would support a rate increase at the December meeting even if inflation cooled, and warned that a larger 50‑basis‑point hike could be considered if price pressures worsened. Dallas Fed President Lorie Logan said the Federal Reserve would need at least two additional quarter‑point hikes to bring inflation under control.

CME FedWatch data now assign a 91% probability to a 25‑basis‑point increase at the December Fed meeting, up from 84% on Monday, while the probability of a 50‑basis‑point hike rose to 10%.

In the currency market, the Japanese yen’s USD/JPY pair traded 0.1% higher after reaching 158.95 yen per dollar earlier in the day – its highest level since late September and a 0.5% jump on Tuesday following the hot CPI release. The Australian dollar’s AUD/USD pair edged up 0.2% after having fallen nearly 1% to a seven‑month low in the prior session. The South Korean won’s USD/KRW pair declined 0.4%, the Chinese yuan’s on‑shore USD/CNY pair rose 0.1%, the Singapore dollar’s USD/SGD pair was flat, and the Indian rupee’s USD/INR pair slipped 0.2%.

Energy‑importing economies received some relief from lower oil prices, as Brent crude briefly fell below $90 a barrel on Tuesday, its lowest level since August. The dip in oil prices can improve the terms of trade for major importers such as India by reducing energy‑import bills, although rising U.S. Treasury yields and a firmer dollar continue to limit currency gains.