Investing.com – Most Asian currencies rose slightly on Thursday as dollar and Treasury yields retreated further from recent peaks, although persistent signs of deflation in China kept sentiment in check.
Markets were now awaiting fresh signals on US interest rates after expectations of an imminent rate cut by the Federal Reserve were largely dampened following a string of solid economic indicators and hawkish comments from Fed officials.
The trend largely curbed the greenback’s gains as the greenback retreated further from a three-month high hit earlier this week. US Treasury yields also retreated from recent highs.
Prices fell 0.1% in Asian trade, continuing their sharp decline overnight. January’s report, due out next week, is now the focus of attention as it provides more insight into interest rate movements.
Most Asian currencies rose. The bank posted its best performance of the day, rising 0.1% and extending gains from earlier this week after the bank warned it could still raise interest rates amid persistent inflation.
The index firmed 0.1%, moving away from a near-record low, as traders looked ahead to a meeting later in the day. The RBI is expected to keep rates unchanged while its forecasts for inflation and economic growth will be in focus.
The index fell 0.1% and remained near a two-month low amid continued uncertainty over when the Bank of Japan will begin to wind down its ultra-loose policy.
He didn’t move much.
The index fell 0.5% after a Bank of Thailand official said the bank was willing to cut interest rates if the country’s private consumption continued to slow.
Any significant gains in Asian assets have been largely tempered by concerns about higher, longer-term U.S. interest rates, with a chorus of Fed officials warning this week that the bank is not considering any monetary easing in the near term.
Signs of continued economic weakness in China have also weighed on sentiment towards the region as Asia’s largest economy continues to battle deflation.
Yuan weakens amid dismal inflation data in China
The price was little changed on Thursday amid continued support from the People’s Bank of China, which intervened in foreign exchange markets earlier this month. But the rate weakened, breaking the level of 7.2 against the dollar, and remained near the minimum in two and a half months.
Official data showed growth was smaller than expected in January, although it contracted for the sixteenth month in a row.
It also recorded its worst monthly contraction since late 2009, indicating that the country’s discretionary spending remains largely subdued amid worsening economic conditions.
However, ING analysts said January inflation data marked the bottom of the current deflation cycle and that inflation was likely to rise in the coming months.
Demand is also likely to be supported in February by the upcoming Lunar New Year holidays. Chinese markets will be closed for a week starting this Friday.