by OXShare
On Thursday, the majority of Asian currencies lost value, mirroring the strengthening of the dollar. This occurred due to the release of better-than-anticipated U.S. retail sales data, which created some uncertainty about the future direction of interest rates.
Conflicting messages during the recent high-level negotiations between the United States and China have affected the overall mood. Despite Presidents Xi Jinping and Joe Biden expressing a commitment to increased communication between the two nations during their meeting on Wednesday, a remark made by Biden referring to Xi as a “dictator” may have provoked frustration among Chinese authorities.
The Chinese currency, the yuan, experienced a decrease of 0.2% against the US dollar to a value of 7.2601. This decline was further influenced by data indicating a continuing decrease in house prices in China.
Following a surge in the dollar’s value, the Japanese yen has once again declined below 151. As a result, traders are paying close attention to potential government intervention in the currency market. Recent data reveals that Japanese exports exceeded expectations in October, while imports fell below what was anticipated.
After experiencing significant losses overnight, the South Korean won increased by 0.2%, while the Malaysian ringgit suffered the most significant decline in Southeast Asia, sliding by 0.8%.
On Wednesday, there was a slight decline in the value of the Indian rupee following the release of trade data that revealed a further increase in India’s significant trade deficit.
The Australian dollar had a poor performance today, declining by 0.5% due to a labor market report that showed mixed results. Although there was an increase in overall employment for October, the unemployment rate also went up and there was a decrease in the number of hours worked.
If there is a slowdown in job growth, the Reserve Bank of Australia will have fewer reasons to increase interest rates, which would have a detrimental effect on the Australian dollar.
The dollar bounces back from its lowest point in two and a half months, thanks to impressive retail sales data.
The US dollar recovered from a low point that it reached earlier this week, and its value continued to rise during Asian trade after gaining overnight. On Thursday, the dollar index and dollar index futures increased by 0.1% following a 0.4% increase in the previous session.
Traders were unsure of when the Federal Reserve would start reducing interest rates in 2024 due to signs of resilience in U.S. retail spending. Although recent data indicated a decrease in U.S. inflation, the strong consumer spending suggested that inflation would remain stable in the near future.
However, the US dollar continued to experience significant declines throughout the week due to lower inflation figures. This caused traders to anticipate that the Federal Reserve would not raise interest rates any further. The central bank has previously indicated that future rate increases would be based on data analysis and has also stated that it intends to maintain higher rates for an extended period of time.
Asian currencies with higher interest rates will be negatively impacted, as the difference between the yields of high-risk and low-risk investments decreases