Most Asian currencies were largely unchanged on Thursday as investors stayed on the sidelines ahead of key U.S. inflation data due later in the day, while attention also turned to a potential rate hike by the Bank of Japan.
The US Dollar Index, which measures the greenback against a basket of major currencies, was steady. US Dollar Index Futures traded 0.1% higher as of 04:40 GMT.
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US CPI awaited to gauge Fed outlook Trading in the region was subdued as markets awaited the U.S. consumer price index, which is expected to provide fresh guidance on the Federal Reserve’s interest rate outlook.
The data follow U.S. labour market figures released earlier this week that showed signs of cooling but failed to deliver a clear signal on when the Fed might begin easing policy, leaving currency markets without strong direction.
Adding to uncertainty around U.S. monetary policy, President Donald Trump said this week that the next head of the Federal Reserve would “believe in lower interest rates by a lot.”
Potential successors discussed by Trump include former Fed governor Kevin Warsh, current Fed Governor Christopher Waller, and White House economic adviser Kevin Hassett, all of whom are viewed by markets as more dovish than the current leadership.
Back in Asia, the South Korean won’s USD/KRW pair edged up 0.2%, while the Singapore dollar’s USD/SGD traded flat. The Indian rupee’s USD/INR gained 0.2% after slipping sharply from record highs in the previous session due to possible central bank intervention.
In China, the yuan’s onshore pair USD/CNY was little changed.
The Australian dollar’s AUD/USD pair ticked down 0.1%.
BOJ expected to hike rates In Asia, focus was also firmly on Japan, where the Bank of Japan began a two-day policy meeting on Thursday. The central bank is widely expected to deliver a rate hike on Friday as it continues to normalise policy after years of ultra-loose settings.
Persistent inflation above the BOJ’s 2% target, rising wages, and improving domestic demand have strengthened the case for further tightening, even as global growth concerns linger.
The Japanese yen’s USD/JPY pair edged 0.1% higher.
"With markets already pricing in a potential BoJ hike, forward guidance on the policy path will be critical for shaping the yen’s outlook," MUFG analysts said in a note.
