Asian exchange rates hold as yen rally cools, dollar at 7-month low amid cut rate bets By Investing.com

Investing.com– Most Asian currencies steadied on Wednesday, with the Japanese yen easing slightly after a strong rally earlier this week, while lingering bets on U.S. interest rate cuts pushed the dollar to near-term lows. seven months.

The yen’s strength pointed to a sustained recovery in shipping trade – a trend that bodes ill for risk-averse Asian markets.

But regional currencies benefited from dollar weakness, with traders remaining largely bearish on the greenback as expectations for a September rate cut rose.

Japanese yen softens after strong rally, carry trade cancels

The Japanese yen eased slightly after a strong rally this week, with the pair up 0.2%.

But the pair fell sharply earlier this week to hover around the ¥145 level, remaining well below the ¥160 highs reached earlier this year.

USDJPY fell as low as 141 in early August as the yen trade was largely canceled out by dovish signals from the Bank of Japan. Rising Japanese interest rates are expected to support the yen and further undermine yen trading in the coming months.

Analysts at Jefferies said USDJPY was likely to settle around ¥145, but could drop as low as ¥120 if the carry trade continues.

Data on Wednesday showed Japan grew less than expected in July, while rising sharply.

Dollar at 7-month low with Powell, rate cut hints in focus

And they moved little in Asian trade after falling to their lowest levels since early January on Tuesday.

The dollar was pressured by growing bets that the Federal Reserve will cut interest rates in September. Markets were divided on 25 basis points or a 50 bps cut next month, it said.

An address by Fed Chairman Jerome Powell at the Jackson Hole Symposium on Friday will provide more clues about the central bank’s plans to cut rates, although Powell is not expected to give any explicit indication of a cut .

Broader Asian currencies fell as markets weighed the prospect of an easing carry trade against the prospect of lower US interest rates.

The Chinese yuan pair settled around 7.1328 yuan after a slightly stronger peg by the People’s Bank. The central bank also kept its benchmark lending rate unchanged on Tuesday.

The South Korean won pair was up 0.5%, while the Singapore dollar pair was flat.

The Australian dollar rose 0.1 percent after minutes from the Reserve Bank’s August meeting showed the central bank was still considering an interest rate hike amid lingering inflation.

The Indian rupee rose 0.1% and remained in sight of recent highs.