Anna 
Most Asian currencies experienced sharp gains on Thursday, while the US dollar approached a four-month low following the Federal Reserve’s announcement that it was halting interest rate hikes and considering rate cuts in 2024. The central bank kept interest rates unchanged, in line with expectations, and hinted at the potential for larger-than-expected rate cuts in 2024. Fed Chair Jerome Powell emphasized progress against inflation.
The US dollar index and dollar index futures both fell 0.3% in Asian trade, nearing their weakest levels since August, around mid-to-low 102. Powell’s remarks also fueled speculation about the timing of rate cuts, with Fed fund futures indicating a more than 70% chance of a 25 basis point rate cut in March 2024.
Asian currencies rose in response to the weakening US dollar, with the Japanese yen surging 1% to a four-month high against the dollar. The Australian dollar gained 0.8%, supported by labor force resilience despite increased unemployment.
Risk-heavy Asian currencies, including the South Korean won and the Philippine peso, saw notable gains, while the Indian rupee remained close to record lows due to India’s record-high trade deficit.
The Chinese yuan rose 0.6% and traded near a four-month high, though concerns about the Chinese economy limited further gains. Investors are awaiting economic data on China’s industrial production and retail sales, scheduled for release on Friday, following disappointing readings for November. Weak inflation data and continued lending activity weakness have prompted calls for stimulus measures, although Beijing has been cautious in deploying additional fiscal support.
