Most Asian currencies were little changed on Friday despite increased bets of a Federal Reserve rate cut next month, while investors turned focus to Tokyo inflation readings to assess the Bank of Japan’s policy outlook.
The US Dollar Index was also muted in Asia hours, but was set for a sharp weekly decline. US Dollar Index Futures also traded unchanged as of 04:50 GMT.
Fed rate cut bets increase
Traders have sharply raised the odds of a 25-basis-point Fed cut at the Dec. 9-10 meeting to around 87% from roughly 40% a week earlier, a swing that has knocked the dollar lower and trimmed yields across the U.S. curve.
The shift was driven by benign U.S. data and some dovish comments from policymakers, although investors remain cautious due to a lack of economic data and conflicting signals from Fed officials.
Speculation over a possible appointment of Kevin Hassett to the Fed Chair role has added another layer to the market debate. A Hassett-led policy stance could tilt toward earlier easing and more explicit support for growth, a dynamic that would typically put further pressure on the dollar.
The South Korean won’s USD/KRW pair gained 0.2%, while the Singapore dollar’s USD/SGD traded flat.
The Indian rupee’s USD/INR pair gained 0.1%, while the Malaysian ringgit’s USD/MYR was steady.
In China, the yuan’s onshore pair USD/CNY was little changed.
The Australian dollar’s AUD/USD pair was also muted on Friday.
