By Ambar Warrick
Investing.com -- The U.S. dollar traded near two-month lows on Thursday as softer-than-expected inflation data and fears of a recession saw markets pricing in a greater chance that the Federal Reserve will pause its rate hike cycle.
But Asian currencies saw limited gains on Thursday, as fears of slowing economic growth kept markets wary of most risk-driven currencies.
The dollar index and dollar index futures moved little in Asian trade, after tumbling to near a two-month low in overnight trade. Data showed that U.S. consumer price index (CPI) inflation eased more than expected in March, although core CPI inflation still remained stubbornly high.
The data triggered increased bets that the Fed will hike rates once more before announcing a pause in June, according to- a scenario that bodes well for rate-sensitive, risk-heavy assets.
San Francisco Fed President Mary Daly also raised the possibility of fewer rate hikes by the Fed, given that the central bank raised interest rates sharply from near zero levels over the past year.
The Japanese yen fell 0.1% after gaining little in overnight trade, while the Chinese yuan was flat, taking little support from data showing a surprise rebound in exports through March. The reading could herald better trends for China’s massive manufacturing sector, especially if offshore demand improves further.
The Indonesian rupiah and the South Korean won were among the few outliers for the day, rising 0.6% and 0.7%, respectively, given that they were among the worst hit by a spike in the dollar through 2022.
The Indian rupee was flat as data showed local CPI inflation eased more than expected in March. The reading lent further credence to the Reserve Bank of India’s recent decision to pause future rate hikes, as it moves to strike a balance between curbing inflation and facilitating economic growth.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.