Anna 
On Wednesday, most Asian currencies traded within narrow ranges, while the dollar maintained its position near five-month peaks following robust U.S. economic data and cautious remarks from the Federal Reserve, which led traders to largely discount expectations of early interest rate cuts.
In recent sessions, many regional currencies had suffered significant losses in the wake of hotter-than-expected U.S. inflation and retail sales figures, indicating persistent inflationary pressures and reducing the likelihood of imminent interest rate adjustments by the Fed.
Federal Reserve Chair Jerome Powell’s comments on Tuesday, highlighting the Fed’s concerns about stubborn inflation, supported the dollar and Treasury yields, exerting pressure on Asian markets.
The dollar index and dollar index futures remained steady near their highest levels since early November, benefiting from a strong rally in the past week. Powell’s remarks prompted traders to revise down expectations of a rate cut in June, with the CME Fedwatch tool now indicating a 79.2% probability of the central bank maintaining interest rates at their current level, while also factoring in a slight chance of a 25 basis point hike.
Anticipating similar rhetoric from other Fed officials in the days ahead, traders continued to favor the dollar, particularly amidst escalating geopolitical tensions in the Middle East, which fueled demand for safe-haven assets.
The Japanese yen continued to weaken, with the USDJPY pair hovering at 34-year highs above the 154 level. Despite Japan’s stronger-than-expected export data for March, persistent yen weakness raised concerns about potential intervention measures by the Japanese government to address currency depreciation.
Meanwhile, other Asian currencies exhibited muted movements or modest recoveries from previous losses. The Australian dollar, represented by the AUDUSD pair, rebounded 0.3% after hitting a five-month low in the previous session.
The Chinese yuan, reflected in the USDCNY pair, remained flat as markets digested mixed economic indicators from Tuesday, while the People’s Bank of China maintained stability in its midpoint fix.
In contrast, the Singapore dollar, denoted by the USDSGD pair, slipped 0.1%, despite data revealing a significant 20% decline in the island state’s key non-oil exports in March.
Similarly, the South Korean won, tracked by the USDKRW pair, retreated 0.3% after reaching a five-month peak on Tuesday.
