Most Asian currencies were little changed on Thursday after sharp losses overnight, as the U.S. dollar stayed firm on signals from Federal Reserve officials that interest rate cuts will be gradual, with investors eyeing key U.S. economic data later in the day.
The US Dollar Index, which measures the greenback against a basket of major currencies, edged 0.1% lower, after jumping 0.6% to a 2-week high overnight.
US Dollar Index Futures also traded 0.1% lower as of 04:30 GMT.
Fed cautious regrading future rate cuts Fed Chair Jerome Powell warned on Tuesday that the central bank must remain “measured” in easing, while other policymakers also stressed caution in moving too quickly.
The remarks tempered bets for aggressive rate reductions even after last week’s first cut since December. More Fed officials are due to speak in the coming days, keeping traders on edge for fresh guidance.
Markets are now awaiting a run of U.S. data to get a clearer direction on the Fed’s policy.
Weekly jobless claims, due later on Thursday, will be crucial as policymakers cited a cooling labour market as the reason for the recent rate reduction.
An advance reading of second-quarter GDP is also expected later in the day, while Friday’s release of the personal consumption expenditures (PCE) price index -- the Fed’s preferred inflation gauge -- will be in focus.
Asia FX holds losses, BOJ meeting minutes in focus
The Japanese yen’s USD/JPY pair ticked 0.2% lower on Thursday, after jumping nearly 1% overnight.
The Bank of Japan’s July policy meeting minutes showed that some policymakers argued for considering rate hikes in the future, highlighting divisions within the board.
The South Korean won’s USD/KRW fell 0.3%, after rising 0.7% overnight.
The Singapore dollar’s USD/SGD traded flat on Thursday, while the Indian rupee’s USD/INR edged down 0.2%.
In China, both the yuan’s onshore USD/CNY and offshore pairs USD/CNH ticked 0.1% lower.
The Australian dollar’s AUD/USD pair rose 0.3%.
