The dollar extended its climb back from one-year bottoms on Monday. As hawkish remarks from Federal Reserve (Fed) members stoked new concerns about interest rate increases. As a result, most Asian currencies declined on the day.
Despite recent indications that inflation was slowing. Federal Governor Christopher Waller called for the central bank to continue raising interest rates. And both the dollar index futures & dollar index increased by 0.2 percent each. This continued gains from Friday.
Waller, a well-known hawk, also pointed out that the Federal Reserve (Fed) had made little headway towards bringing inflation back to its goal of two percent. His remarks caused markets to price in a higher likelihood of a rate increase in May and dispelled predictions that the Federal Reserve (Fed) will stop raising interest rates by June.
Given that several central banks in the region have already stopped raising interest rates in response to softening inflation and slowing economic development. The majority of Asian currencies decline on this idea. The difference between yields with high and low risk could become much smaller if the United States rates continue to rise.
Chinese yuan dropped 0.1 percent as the Japanese yen rose 0.1 percent.
The People’s Bank of China (PBOC), which held mid-term lending interest rates at record lows prior to a crucial data on 1st qtr economic development due on Tuesday, also affected the yuan.
After the nation lifted the majority of its anti-COVID regulations, the data is anticipated to indicate some improvement in growth.
The The People’s Bank of China decision on Monday. According to analysts at ING, revealed that the central bank wasn’t “particularly worried” about an economic recuperation. Although they cautioned that the 1st qtr will see only a moderate return in GDP.
Data on industrial output and retail sales are also coming on Tuesday. And the People’s Bank of China will decide this week on the crucial loan prime rate.
The Australian dollar stayed unchanged prior to the release on Tuesday of the Reserve Bank’s April meeting minutes. The Reserve Bank of Australia’s (RBA) decision to stop interest rate rises is expect to be further clarified by the minutes.
Prior to the release of the wholesale pricing index inflation data later in the day. Which is predict to show further decrease in inflation, the Indian rupee also experienced sideways trading.