Most Asian currencies experienced minimal movement on Wednesday, while the dollar steadied after recent losses. Investors were cautious as they awaited key cues on U.S. monetary policy, particularly from Federal Reserve Chair Jerome Powell’s two-day testimony. Sentiment in Asian markets remained somewhat weak following modest economic signals from China, which set a 2024 gross domestic product target of 5%, mirroring 2023, and provided limited indications of additional policy support.
The Chinese yuan edged slightly lower, approaching the 7.2 level. The Japanese yen strengthened slightly below 150, benefiting from safe-haven demand amid broader market declines on Tuesday. Attention focused on the potential timing of the Bank of Japan’s interest rate hikes.
The Australian dollar performed relatively well, rising nearly 0.2% after fourth-quarter GDP data met expectations. Strong government and capital spending offset a sharp decline in personal consumption, but the economy faces challenges as slowing consumption may lead to further pressure.
Other Asian currencies, including the South Korean won, Singapore dollar, and Indian rupee, maintained a narrow range on Wednesday. The dollar index and dollar index futures showed limited movement in Asian trade, stabilizing after recent declines from three-month highs. Powell’s testimony is closely monitored, with expectations that he will maintain a hawkish stance on interest rates. Traders maintained bets on a 25 basis point rate cut in June, according to the CME Fedwatch tool. Additionally, the focus remains on nonfarm payrolls data for February later in the week.