Asian Currencies Surge On Fed Rate Cut Signals

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Asian Currencies Surge On Fed Rate Cut Signals

Asian Currencies Surge On Fed Rate Cut Signals

The recent Fed meeting has renewed hopes that a rate cut is only a few months away. As a result, the greenback came under pressure and sent most of the Asian currencies higher on Thursday.

The DXY retreated from its weekly highs on comments that the Fed is still committed to lowering the policy rate in 2024. Earlier, a resurgence in inflation had sparked fears that the Fed might delay the rate cuts after all.

75 Bps Rate Cuts Expected In 2024

In 2024, the Fed will likely go with a rate cut worth 75 basis points, but it will be done in 2-3 stages rather than all at once. This means the investors are now looking forward to high-yielding assets such as the Asian currencies as opposed to the greenback.

Besides the Federal Reserve meeting, the economic news from Asian economies has also contributed to the gains seen in the currency markets.

One of the biggest changes seen after the Fed meeting was the USDJPY, which has retreated from 4-month highs. For now, the USD/JPY can be seen near 150.53 with a -0.5% change for the day.

Overall, a hawkish BoJ and the upcoming rate cuts in the USA present an ideal situation for the Japanese Yen. If we look back, the JPY has been on the losing side for the last few years, but that is about to change now.

Besides the JPY, the AUD also turned higher which suggests that the positive sentiment is shared across all the FX currencies.

The South Korean Won, which is another prominent currency from Asia, gained upside against the greenback. The USD/KRW showed a change of -0.3%, a sign of the Korean Won's strength. Additionally, the USD/SGD also declined by 0.2%.

However, the one currency that showed no response to the Fed was the INR, which remained at nearly 83.07 with a bearish bias over the long term. Similarly, the Chinese Yuan is trading near 7.1986 against the greenback.

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