On Thursday, Asian currencies traded mixed, while the US dollar remained near a three-week low amid investor caution ahead of central bank meetings.
On Thursday, Asian currencies showed mixed dynamics. The US dollar remained near a three-week low as market participants took a cautious stance ahead of a series of central bank decisions next week.
The dollar index fell 0.2% and stood at 101.58 as of 07:53 Moscow time. This is the lowest value since October 1. The dollar's decline occurred amid falling yields on US Treasury bonds and strengthening of other major currencies. Meanwhile, volatile oil prices and geopolitical tensions maintain uncertainty regarding inflation and future regulator policies.
The focus was on the meetings of the Federal Reserve, the Bank of Japan, and the European Central Bank, scheduled for October 28–30. The USD/JPY pair fell 0.3%. Traders factor in the likelihood of the Bank of Japan keeping rates unchanged and possible currency intervention. Investors await updated inflation forecasts and comments from Bank of Japan Governor Kazuo Ueda.
The Chinese yuan on both the onshore and offshore markets barely changed and stayed near four-year lows. The USD/KRW pair fell 0.3%, while the USD/SGD pair traded unchanged. Expectations that major central banks will leave rates unchanged but signal possible further tightening curb active currency trading.
Markets mostly expect the Fed to keep the rate in the 3.75–4.00% range. The Indian rupee received support from measures by the Reserve Bank of India aimed against speculative demand for dollars. The rupee strengthened for nine trading sessions in a row until Wednesday, and the USD/INR pair stayed near 94.44. High oil prices, however, continue to pose risks for India as a major energy importer.
The AUD/USD pair fell 0.1% after four days of gains. The deputy head of the Reserve Bank of Australia earlier noted a worsening inflation forecast due to rising oil prices, which reinforced expectations of a longer period of high rates in Australia.