Investing.com – Most Asian currencies rose on Thursday, gaining some respite as the dollar retreated from a more than five-month peak, although concerns about further U.S. interest rate hikes remained at the forefront.
Regional currencies have suffered sharp losses in recent sessions as strong U.S. economic data and hawkish signals from the Federal Reserve sparked a rally in the dollar and Treasury yields.
But the dollar took some gains on Wednesday and sentiment improved marginally amid no immediate escalation in tensions between Iran and Israel.
The dollar fell from a 5.5-month high
Both dollars fell slightly in Asian trade, extending overnight declines as markets locked in some recent gains for the greenback.
Both indicators remained close to levels last seen in early November.
The dollar’s near-term outlook remains bright, especially as traders have all but abandoned bets that the Federal Reserve will cut interest rates in June.
The sentiment was fueled by strong US inflation data, while Fed Chairman Jerome Powell also flagged the possibility of longer-term rate hikes in his address earlier this week.
The prospect of high US interest rates does not bode well for Asian markets as it narrows the gap between risky and low-risk returns.
US Treasury yields have also risen sharply in recent sessions, approaching a five-month high.
Interest rate concerns keep Asia’s foreign exchange market subdued
Elsewhere in Asia, currencies firmed slightly after seeing some relief from the dollar’s decline. But gains were limited as concerns about U.S. interest rates persisted.
The Japanese yen has strengthened in recent sessions, with the pair returning to 153 after testing 34-year highs above 154. The yen’s weakness has also meant markets remain wary of government intervention.
The Japanese index, due out on Friday, is expected to provide more insight into the yen.
The Australian dollar rose 0.3%, continuing to recover from five-month lows hit this week. Although data for March showed some stabilization, the sector remained relatively tight.
The Chinese yuan pair was little changed after rising to five-month highs in recent weeks. Uncertainty over the Chinese economy kept traders biased toward the yuan as the People’s Bank took steps to stem further losses in the currency.
The South Korean won fell 0.4% and the Singapore dollar fell 0.1%.
The Indian rupee remained near record highs above 83.5.