Asian FX End Up Slipping Due To New Hopes Of US Interest Hikes

Asian FX End Up Slipping Due To New Hopes Of US Interest Hikes

December 7, 2022 0 By Wiley McDermott

On Tuesday, the majority of the Asian currencies took a dive in the latest trading session. The dip came in from the growing fears of the Asian market due to the possibility of seeing a rise in the US interest rates.

Chinese Yuan is in Danger

With updates coming in from the United States about their economy and growth, the Chinese yuan and the Asian currencies are not in a good shape.

The sentiments of the investors are still with the US dollar as they hope that the Feds may continue hiking the interest rates with aggression.

Even the COVID situation coming under control in China resulting in the business hubs coming back to normal may fail to support the yuan as much as expected.

The traders may not invest in the yuan with they fear inside them the possible price surge of the dollar. Therefore, the Chinese yuan is not looking to be in a good shape given the current circumstances.

Economic Developments from the US

After the US employment data was shared, the trading price of the dollar took a dive. However, the above expectation of US employment data has worked like a pumping factor for US traders.

The latest data shared by the US Feds shows that the working sector has not been impacted by the inflation rates in the past couple of months.

This means that despite the surge in interest rates, the working class sector in the US is doing well. This has given hope to the USD traders that the Feds may consider it as a huge advantage.

The latest developments and above-expectation data for employment may encourage the US Feds to rethink their recent decision about the interest rates.

In the November meeting, the US Feds decided that they will start to lower the interest rates they have been increasing aggressively.

It was decided that from the end of December, they will start reducing the interest rates. However, the promising data has fueled another sentiment that the US Feds may continue hiking the interest rates.

With the Feds witnessing no major impact on the working class in the US, they may remain hawkish on the interest rate hikes.

USD Price against the Asian Currencies

Before the promising data was shared, the trading price of the dollar was much lower than the trading price of the yuan. It had even ended up reaching a five-month low.

Due to the latest developments, the trading price of the dollar has surged against the Chinese yuan. At the moment, the USD price is hovering in a comfortable zone versus the CNY.

As per the reports, the USD is well over the 5-month low trading price it had experienced a few days earlier.

Monday was among the best days for the greenback in terms of a strong recovery and that was all because of the positive economic data.

In the latest trading session, the trading price of the Chinese yuan sunk 0.3% against the dollar. At the time of writing, the CNY value versus the USD is 6.9813.

The price of the yuan has also plunged due to the internal updates related to COVID. The government has announced that they plan on retaining some of the anti-COVID safety measures in the jurisdiction.

The value of the Japanese yen which had reached a really high trading price against the dollar has sunk. The report shows that the value of the JPY has dipped 0.1% against the USD.

Among the Asian currencies, the Indian rupee and the Indonesian rupiah were the worst performers. The currencies reportedly faced 0.8% and 0.4% dips in the latest trading session.

The trading price of the Australian dollar has surged 0.6% versus the dollar and it is now trading at 0.6737 per dollar.

The Philippine peso has also experienced no movement in the latest trading session and has remained flat throughout the day.