Asia FX muted with Fed, inflation cues on tap; Kiwis dive on RBNZ cut By Investing.com

Investing.com– Most Asian currencies remained in a tight range on Wednesday, while the dollar settled on expectations of more signals from the Federal Reserve and U.S. inflation on the interest rate track.

The New Zealand dollar lagged the benchmarks, falling sharply after the Reserve Bank of New Zealand cut interest rates and struck a tepid tone.

Sentiment against regional currencies was hampered by waning optimism about more stimulus in China as the government offered few details on its plans to deploy more economic support. The yuan also suffered steep losses from the previous session.

Dollar steady with Fed minutes, inflation on tap

And they moved little in Asian trade, holding close to a seven-week high on Monday.

The dollar’s gains came after strong payrolls data raised doubts about how much impetus the Fed has to continue sharply cutting interest rates. Traders were seen pricing in an 83.2 percent chance that the Fed would cut rates by 25 basis points in November and a 16.8 percent chance that rates would remain unchanged, it showed.

The Fed’s September meeting – in which the central bank cut interest rates by 50 bps – is due later on Wednesday, providing more clues about its plans.

Inflation data for September is available later this week and is also likely to factor into the Fed’s outlook.

New Zealand dollar weakens after RBNZ rate cut

The New Zealand dollar pair fell 1% on Wednesday after the RBNZ and turned dovish.

The 50 basis point cut was at the high end of market expectations, with the bank citing lower inflation and economic growth.

Wednesday’s cut is also the RBNZ’s second cut this year, with the central bank giving mixed signals on whether interest rates will fall further.

Chinese yuan settles after sharp losses; the cheerfulness of the stimulus decreases

The Chinese yuan edged lower on Wednesday, with the pair up 0.1%. The pair rose 0.6% in the previous session as onshore trading resumed after the Golden Week holiday.

Sentiment on China was hampered by Beijing providing few details on how it plans to implement recently unveiled stimulus measures – which include rate cuts and more liquidity support.

But lower interest rates also present more difficulties for the yuan.

Broader Asian currencies held in a tight range, while commodity-linked units such as the Australian dollar weakened on China concerns. The pair fell 0.2%.

The Japanese yen pair moved little after weakening substantially against the dollar over the past week.

The Indian rupee pair hovered near record highs ahead of , where the central bank is expected to keep rates steady.