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Investing.com-- Most Asian currencies were little changed on Wednesday as traders weighed rising expectations of a U.S. rate cut next month, while the Australian dollar jumped on a hot inflation report, and the New Zealand dollar surged after the central bank decision.
The US Dollar Index was largely muted in Asia hours after dropping 0.5% overnight. US Dollar Index Futures were also steady as of 04:48 GMT.
Fed cut bets, next Chair candidate in focus
Fed funds futures now imply nearly an 84% probability of a 25-basis-point cut following softer retail sales and producer price data, though markets remained divided over whether policymakers will ease in December.
The figures reinforced views that inflation is gradually easing, adding momentum to rate-cut bets. But recent comments from several Fed officials stressing a meeting-by-meeting approach have tempered confidence.
Meanwhile, White House Council Director Kevin Hasset was seen as a frontrunner to be the next Fed Chair.
"In particular, Kevin Hasset is perceived by the market as someone who is a close ally with President Trump and would as such bring his approach to interest rates to the Fed," MUFG analysts said in a note.
The U.S. dollar softened overnight, leading Asian currencies higher on Tuesday, but they steadied in early Wednesday trading.
The Japanese yen’s USD/JPY pair was largely unchanged after falling 0.5% overnight. The move came after a Reuters report stated that the Bank of Japan is signaling a potential rate hike as soon as next month, citing renewed concerns over yen weakness and easing political pressure to maintain low rates.
The South Korean won’s USD/KRW pair edged up 0.1%, while the Singapore dollar’s USD/SGD traded flat.
The Indian rupee’s USD/INR gained 0.1%.
In China, the yuan’s onshore USD/CNY and the offshore USD/CNH pairs were both largely muted.
Aussie dollar gains on strong CPI; Kiwi dollar jumps after RBNZ cut
The Australian dollar outperformed regional peers after data showed consumer inflation remained stubbornly high in October.
The currency’s AUD/USD pair jumped 0.6% on Wednesday, marking fourth consecutive sessions of gains.
The stronger-than-expected reading dampened expectations of further easing by the Reserve Bank of Australia, with investors dialing down bets for a December rate cut.
The New Zealand dollar’s NZD/USD pair surged 1.2% after the Reserve Bank of New Zealand cut its cash rate by 25 basis points to 2.25%, as forecast, but signalled the easing cycle may now be over.
The central bank now forecasts the cash rate will be 2.20% in the first quarter of 2026, effectively closing the door to further cuts.