Asian currencies fall, dollar at 7-month low on focus on interest rate cuts By Investing.com

Investing.com– Most Asian currencies rose on Tuesday, while the dollar held to a more than seven-month low on growing confidence that the Federal Reserve will cut interest rates in September.

The dollar’s weakness comes days ahead of Fed Chairman Jerome Powell’s speech at the Jackson Hole Symposium on Friday, where he is expected to give more hints about a rate cut.

A softer greenback helped boost the Japanese yen on Monday, while the Chinese yuan weakened slightly after the People’s Bank kept its benchmark lending rate on hold as expected.

Dollar clings to 7-month low, Powell address looms

And they steadied in Asian trade after falling to their lowest levels since early January on Monday.

The greenback fell in tandem with US Treasury yields amid growing optimism that the Fed will cut interest rates in September.

on Friday is expected to provide more clues, although analysts do not expect the Fed chairman to give a definitive indication of when and by how much the central bank will cut interest rates.

Traders are pricing in a higher possibility of a 25 basis point cut in September, according to .

Lower rates show more outflows for the dollar and herald some strength in Asian markets.

Japanese yen falls after sharp rebound

The Japanese yen fell slightly on Tuesday after a strong recovery in the previous session. The pair was up 0.3% at 147.01 yen, after dipping as low as 145 yen.

The yen’s strength came mainly from a weaker dollar and economic readings in Japan suggested the Bank of Japan had more room to raise interest rates this year.

Chinese yuan weakens as PBOC holds base lending rate

The Chinese yuan pair rose 0.1%, receiving little support from the People’s Bank of China, keeping the benchmark on hold.

The August hold came after the PBOC unexpectedly cut the LPR in July as it continued to boost economic growth.

The PBOC is expected to cut interest rates further this year amid growing concerns about an economic slowdown in China. This trend is also expected to keep the yuan under pressure.

Broader Asian currencies moved in a flat-to-lower range on Tuesday. The Aussie dollar pair fell 0.2 percent, even as minutes from the Reserve Bank’s August meeting showed the central bank was considering a rate hike and was likely to keep rates unchanged for longer.

The Singapore dollar rose 0.2 percent, while the South Korean won rose 0.1 percent.

The Indian rupee pair held below record highs amid signs of persistent market intervention by the Reserve Bank of India.