TSX runs higher on rate cut expectations
Investing.com-- Most Asian currencies were little changed on Friday but remained on track for weekly losses, pressured by a stronger dollar amid uncertainty over the Federal Reserve’s rate path, while attention today was on Japan’s sticky consumer inflation data.
The US Dollar Index, which measures the greenback against a basket of major currencies, fell 0.2% in Asia hours, but headed for its second straight weekly gain.
Meanwhile, Asian currencies remained battered by U.S trade tariff threats and the Fed’s caution over interest rates.
Markets navigate Fed, tariff uncertainty
Data this week showed that the U.S. consumer price index came in slightly above expectations, highlighting early effects of President Donald Trump’s trade tariffs.
The CPI reading has reinforced the Fed’s cautious stance on interest rates. Several Fed officials noted this week that inflation remains sticky and that the recent uptick may reflect the early pass-through of tariffs into consumer prices.
Meanwhile, concerns over the central bank’s independence were exacerbated amid growing tensions between President Trump and Fed Chair Jerome Powell.
Trump on Wednesday rejected claims that he was planning to remove Fed Chair Jerome Powell but did not rule out the possibility.
The U.S. president has ramped up his tariff salvos this week, and with less than two weeks left for the August 1 deadline, investors remained on edge.
Asia FX on track for weekly declines
The South Korean won’s USD/KRW tarded flat and was set to gain nearly 1% for the week.
The Singapore dollar’s USD/SGD pair lost 0.1% on Friday, but remained on track for a weekly loss.
Both the onshore USD/CNY and offshore USD/CNH Chinese yuan pairs edged 0.1% lower on Friday.
Elsewhere, the Indian rupee’s USD/INR pair remained flat, but also headed for weekly losses.
Bucking the regional trend, the Australian dollar’s AUD/USD pair gained 0.4% on Friday, set for a weekly rise as weak jobs data spurred RBA rate cut bets.
Japan CPI in focus ahead of upper house elections
The Japanese yen’s USD/JPY pair was also muted on Friday, but set for a 0.7% weekly loss.
Attention turned to upper house elections due on Sunday, as polls suggested Prime Minister Shigeru Ishiba’s coalition may lose its upper house majority.
Meanwhile, data on Friday showed that Japan’s core inflation eased in June but remained above the Bank of Japan’s 2% target, reinforcing expectations of more rate hikes amid persistent price pressures.