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Asia FX muted, dollar slides from near 5-mth highs amid rate uncertainty By Investing.com

Asia FX muted, dollar slides from near 5-mth highs amid rate uncertainty By Investing.com

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Investing.com– Most Asian currencies moved little on Thursday, seeing little support even as the dollar fell sharply from near five-month highs as uncertainty over the path of U.S. interest rates remained in play. 

Regional trading volumes were also muted with market holidays in China and Hong Kong.

Dollar sinks from near 5-mth highs after Powell comments 

The and fell slightly in Asian trade, extending steep overnight losses after Federal Reserve Chair Jerome Powell offered up mixed signals on U.S. interest rate cuts.

While Powell said the Fed will eventually cut interest rates later this year, he offered scant cues on the timing and scale of the potential cuts. Powell also said the central bank will need more confidence that inflation was moving towards its 2% annual target.

Powell’s comments came just ahead of key data for March, which is due on Friday. Sticky inflation and strength in the labor market are the Fed’s two biggest considerations for potentially cutting interest rates.

Before the labor data, focus is also on addresses by other members of the Fed’s rate-setting committee. FOMC members and are set to speak at separate events later on Thursday.

USDJPY hovers near 152 amid intervention threats 

The Japanese yen moved little on Thursday, although the remained close to highs last seen in 1990. 

This proximity to 34-year highs, which were above the 152 level for USDJPY, kept markets on edge over any potential government intervention in currency markets. 

A slew of top Japanese officials had warned markets over speculating against the yen, and that they would not rule out any measures to bring down the USDJPY pair.

Breaches of 152 had attracted record-high levels of intervention by the Japanese government in 2022. 

Broader Asian currencies drifted in a flat-to-high range, amid Chinese market holidays and anticipation of more cues on U.S. interest rates.

The remained fragile, with the offshore pair remaining well above the closely watched 7.2 level.

The Australian dollar’s pair rose 0.2%, tracking some strength in commodity prices, while the South Korean won’s pair rose 0.3%.

The Singapore dollar’s pair tread water, while the Indian rupee’s pair remained close to record highs above the 83 level.

Focus was also on a on Friday, where the bank is widely expected to keep rates unchanged. But any comments on inflation and economic growth will be closely watched, especially ahead of the 2024 Indian general election. 

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