Gold prices jump to near 3-week high amid US shutdown progress
Investing.com-- Most Asian currencies weakened on Tuesday, with the Japanese yen hitting a nine-month low as the dollar firmed on progress towards ending the longest ever U.S. government shutdown.
Easing bets on a U.S. interest rate cut in December also saw traders favor the dollar over regional currencies, as did continued uncertainty over the U.S. economy amid a lack of official data.
Dollar firms slightly as US Senate passes bill to end shutdown
The dollar index and dollar index futures both rose about 0.1% in Asian trade, after the U.S. Senate late on Tuesday passed a bill to unlock government funding and end a long-running shutdown.
The bill will now head to the House of Representatives for consideration, where the Republican majority signaled that it will pass the bill by as soon as Wednesday, after which it will be sent to President Donald Trump to be signed into law.
The bill now stands to end the longest government shutdown in U.S. history, which entered its 41st day on Monday.
An end to the shutdown will also open the path for the U.S. government to release official economic data, which will provide the market with more cues on the world’s largest economy.
Asia FX weak, Japanese yen at 9-mth low amid rate cut uncertainty
Broader Asian currencies weakened amid easing bets that the Federal Reserve will cut interest rates in December.
The Japanese yen was among the worst hit by this trend, as traders also phased out bets on a December rate hike by the Bank of Japan. The yen’s USD/JPY pair rose 0.2% to 154.49 yen, its highest level since early-February.
The Chinese yuan’s USD/CNY pair rose 0.1%, remaining under pressure from persistent concerns over a cooling Chinese economy. Mildly positive inflation data for October did little to support the yuan.
The Australian dollar’s AUD/USD pair, usually seen as a gauge of Asia-Pacific risk appetite, fell 0.1%, even as a private survey showed a drastic improvement in Australian consumer sentiment.
The South Korean won’s USD/KRW pair lagged its peers, rising 0.6%, while the Singapore dollar’s USD/SGD rose 0.1%.
The Taiwan dollar’s USD/TWD was flat, while the Indian rupee’s USD/INR pair rose slightly.
Markets were seen steadily pricing out expectations for a U.S. interest rate cut in December, amid growing uncertainty over the economy, which the Fed is likely to share. The central bank had also downplayed expectations for a December cut during its October meeting.
Traders were pricing in a 57.4% chance for a 25 basis point cut in December, down from 61.9% seen yesterday, CME Fedwatch showed.