Investing.com – Most Asian currencies rose sharply on Thursday, while the dollar fell from two-week highs after comments from the Federal Reserve kept expectations alive for interest rate cuts.
The Fed on Wednesday maintained its forecast to cut rates by 75 basis points this year. The move, especially the Fed’s forecast, has increased appetite for high-yielding, risk-focused assets.
Hawkish signals from some Asian economies also supported regional currency markets.
USDJPY fell from four-month high amid signals from the Fed and a rate hike by the Bank of Japan
The Japanese yen strengthened sharply on Thursday, with the pair falling 0.5% from a four-month high to 150.53.
The prospect of lower US interest rates and more aggressive behavior from the Bank of Japan bodes well for the yen, which was hit by higher US interest rates last year.
Purchasing managers’ index data for March showed some resilience in the Japanese economy: the contraction was smaller than expected but continued to grow.
For the first time in 17 years, the Bank of Japan this week announced some confidence in the Japanese economy. Analysts say any further tightening of monetary policy by the central bank will largely depend on the development of Japan’s economy.
AUDUSD rises on hot labor data
The Australian dollar was the best performer in Asia on Thursday, with the pair rising 0.6%.
The rise of the Australian dollar was mainly driven by a significantly stronger-than-expected index, which also fell to a six-month low.
The strength of the labor market gives the Reserve Bank of Australia more room to keep interest rates high for longer. That idea helped Australian bulls shrug off less aggressive signals from the RBA at its meeting earlier this week.
Dollar falls as Fed bets on rate cuts rise
The exchange rate fell sharply in Asian trading on Thursday amid growing bets that the Federal Reserve will begin cutting rates as early as June.
Fed officials said the bank is still considering cutting rates by at least 75 basis points. this year, and Fed Chairman Jerome Powell also expressed some confidence that inflation will remain on track to the central bank’s annual target of 2%.
Traders now estimate there is more than a 70% chance that the Fed will cut rates by 25 bps. in June, according to .
In general, Asian currencies strengthened on this idea.
The South Korean won fell 0.3% and the Singapore dollar fell 0.2%.
The Indian rupee pair is steady at 83.07, while the Chinese yuan is also steady at around 7.1986.
Sentiment toward the yuan was dented by senior officials at the People’s Bank of China, who signaled they had plenty of room to cut rates further this year.