Asian Currencies Flat Amid Dollar Strength

Most Asian currencies remained flat to low on Wednesday, while the dollar strengthened due to falling commodity prices and persistent uncertainty about the U.S. presidential race.

Japanese Yen Gains Strength

The Japanese yen stood out positively, appreciating against the dollar. Factors such as short covering and favorable economic data propelled the yen to its highest levels in over a month, with the USDJPY pair declining 0.3% to 155.10 yen.

This momentum continued from last week, as speculations of possible currency market interventions by the government bolstered the yen’s strength. Positive purchasing managers index (PMI) data also contributed, with a rebound in services activity offsetting unexpected contraction in manufacturing.

Attention is now on the upcoming Bank of Japan meeting, as inflation and PMI readings raise expectations of a 10 basis points interest rate hike.

Dollar Recovery Amid Federal Reserve Watch

The dollar index saw slight gains in Asian trading, fueled by growing safe haven demand stemming from deteriorating sentiment towards China and U.S. political uncertainties.

Vice President Kamala Harris appears to have solidified her standing as the Democratic nominee, slightly ahead of Republican rival Donald Trump, according to a Reuters/Ipsos poll.

Traders remain focused on the Federal Reserve’s meeting next week, where rates are expected to remain unchanged, but any hints about future rate cuts will be keenly observed.

Commodity-Linked Currencies Decline

The Australian and New Zealand dollars, influenced by commodity prices and China’s economic outlook, experienced significant declines, with AUDUSD and NZDUSD falling 0.3% and 0.5%, respectively. Weak PMI data contributed to the Aussie’s struggles.

The Chinese yuan remains near late-year highs, reflecting persistent worries about slowing economic growth in China. Dismal commodity price performances, particularly in oil and metals, contributed to broader currency weakness across Asia. The South Korean won and Singapore dollar remained flat while the Indian rupee neared record highs above 83.7 rupees, showing little reaction to a Union Budget aimed at addressing fiscal deficits.