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HomeFOREXAsian Currencies Stagnant as Dollar Holds Strong Amid Powell's Rate Comments
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Asian Currencies Stagnant as Dollar Holds Strong Amid Powell’s Rate Comments

Asian currencies remained largely subdued on Wednesday, maintaining narrow trading ranges, while the dollar steadied near five-month highs following robust U.S. economic data and cautious remarks from the Federal Reserve, which tempered expectations of imminent interest rate cuts.

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Most regional currencies had experienced significant declines in recent sessions, triggered by higher-than-expected U.S. inflation and retail sales figures, indicating persistent inflationary pressures that reduce the likelihood of immediate rate cuts by the Fed.

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Federal Reserve Chair Jerome Powell’s comments further reinforced this sentiment, providing support to the dollar and Treasury yields, while exerting pressure on Asian markets.

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The dollar index and dollar index futures hovered near their highest levels since early November, driven by Powell’s acknowledgment of sticky inflation, which diminished prospects for rate cuts.

Market sentiment favored the dollar as Powell’s stance prompted traders to revise down expectations for a rate cut in June, with a significant probability of the Fed maintaining interest rates at their current level and even a slight chance of a rate hike.

Amid escalating geopolitical tensions in the Middle East, safe-haven demand bolstered the dollar’s strength, adding to the prevailing bias in favor of the greenback.

The Japanese yen continued to weaken, with the USDJPY pair reaching a 34-year high above the 154 level. Although Japanese exports exceeded expectations in March, the persistent weakness in the yen raised concerns about potential intervention measures by the Japanese government to stabilize the currency.

Other Asian currencies exhibited mixed performance, with the Australian dollar recovering slightly from a recent low, while the Chinese yuan and Singapore dollar remained relatively flat. The South Korean won, which surged to a five-month high in the previous session, saw a modest retreat against the dollar on Wednesday.

Overall, Asian currencies remained subdued amid the prevailing strength of the dollar and cautious sentiment surrounding Fed policy, with investors closely monitoring developments in both domestic and global markets for further cues.

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