Asian Currency Market Overview

Investors observed mixed movements across Asian currencies on Monday. The Chinese yuan remained near its strongest level in more than four years, while the U.S. dollar index edged up 0.1% to 101.94, indicating a broadly steady dollar ahead of the U.S. midterm elections and a busy week of economic data releases.

Key Exchange Rate Movements

  • The USD/JPY pair rose 0.2% to 157.88, leaving the yen slightly weaker.
  • The EUR/USD pair increased 0.1% to 1.1169, staying close to a 17‑month low of 1.1159 touched earlier.
  • The GBP/USD pair was virtually unchanged at 1.3386.
  • The offshore yuan (USD/CNH) quoted at 6.6523, while the on‑shore yuan (USD/CNY) was at 6.6540.
  • On‑shore yuan strength reached 6.659 per dollar on Friday, the strongest since 6 June 2022, marking a roughly 5% gain against the dollar for the year and positioning the currency for a fourth consecutive monthly advance, aided partly by exporters converting dollar earnings into yuan.
  • The USD/KRW rose 0.7% to 1,342.83, reflecting a relatively sharp decline for the South Korean won amid volatile foreign‑investment flows and concerns over the sustainability of the equity rally driven by semiconductor and AI‑related stocks.
  • The USD/IDR advanced 0.4% to 18,171, the USD/SGD rose 0.2% to 1.2795, and the USD/MYR climbed 0.3% to 4.0665.
  • The AUD/USD slipped 0.1% to 0.7024 ahead of the Reserve Bank of Australia’s policy decision, with expectations that the RBA will raise its cash rate to 4.85%, a near‑two‑decade high.
  • The NZD/USD fell 0.3% to 0.5614, extending pressure after the Reserve Bank of New Zealand’s surprise rate hold at 2.75% that pushed the New Zealand dollar down 1.2% last week.

Central Bank Actions and Policy Outlook

  • The Federal Reserve, European Central Bank, Bank of Japan and Reserve Bank of New Zealand all left interest rates unchanged last week, joining the Bank of Thailand.
  • The Bank of Japan’s decision followed an 8‑1 vote to keep rates at 1.25%.
  • The Reserve Bank of New Zealand’s unexpected hold at 2.75% contributed to the New Zealand dollar’s decline.
  • The Bank of England, as well as central banks in Norway and Sweden, are slated to announce policy decisions later this week.
  • In Malaysia, Bank Negara Malaysia is expected to keep its policy rate unchanged at 2.75% on Thursday.
  • The People’s Bank of China set Friday’s midpoint at 6.7138 per dollar, the strongest fixing since February 2023, though still substantially weaker than market estimates.

Political and Economic Context

  • U.S. investors are focused on the Tuesday midterm elections, which will determine control of Congress and influence government spending and federal borrowing. Democrats are widely expected to retain the House, while the Senate outcome remains uncertain.
  • A Democratic sweep could create obstacles for state‑level data‑centre and AI infrastructure investment, and could intensify debate over raising the U.S. debt ceiling.
  • October U.S. employment data, due Friday, will be closely watched for clues about the Federal Reserve’s next policy move.

Regional Economic Indicators

  • RatingDog’s private‑sector survey indicated continued expansion among manufacturers and stronger factory output, providing some support for the yuan after a contraction in the official manufacturing PMI.
  • Upcoming inflation releases from Taiwan, Thailand and the Philippines are expected to offer further signals on regional price pressures.
  • DBS forecasts South Korean exports to accelerate year‑on‑year in October, projecting a trade surplus of $43 billion, while Indonesia’s third‑quarter growth is expected to ease to 5.2% from 5.3%.

Market Sentiment

Overall, the mixed currency movements reflect a balance between a strengthening yuan, a broadly steady dollar, and divergent central‑bank stances across the region, set against the backdrop of upcoming U.S. elections and key regional inflation data.