PCE Data Causes Asia FX to Move Higher While BOJ Keeps Fueling Yen Rally

On Thursday, the majority of the Asian currencies experienced price surges against the trading price of the US dollar.

Just as the prices of the Asian currencies moved upwards, the value of the dollar experienced a significant pull.

Investors Await the Key Economic Data

The dollar price found itself retreating on Thursday as it was not able to hold its own against the Asian currencies.

For the time being, investors have stopped supporting the dollar as they are waiting for more economic data to come in.

This time, the investors await the key economic data, which would provide them with more information about the inflation situation in the US.

If the inflation rates move lower, then it means that the Feds will have a reason to lower the interest rate hikes.

This would eventually lower the price of the dollar and if it is the opposite of that, then the dollar price will rise.

The Feds will have no choice but to continue increasing the interest rates at the same (50 bps) rate or move it up to 75 bps.

If the Feds give any kind of indication of pulling or pushing the interest rate hikes, the dollar price will start moving in proportion with their decision.

Therefore, the investors do not want to find themselves at a loss, which is why they are eagerly waiting for the data to come out.

They do not want to accumulate the dollar only to learn that the price of the dollar is moving lower. This could bring them huge losses, which they would not want to see in a million years.

Japanese Yen is Growing Stronger

While the trading price of the dollar is moving in a downward direction, it is the yen that seems to be growing in strength.

The Japanese central bank has confirmed that they will not go back on their decision of hiking the interest rates.

With the Bank of Japan adamant about increasing the interest rates, the price of the yen is gaining momentum.

Given the current market sentiments, the Japanese yen has become untouchable for the dollar until the inflation data turns out to be negative.

In that case, the Feds may increase the interest rates which will eventually push the trading price of the dollar higher in comparison with the yen.

Due to the recent developments with the dollar price, the Japanese yen has become the top performer in the Asian FX market.

The FX market data shows that the trading price of the yen has experienced a 0.5% increase against the trading price of the dollar.

With the recent push, the value of the yen has hit a four-month high against the trading price of the dollar. The yen was already growing stronger but then the BOJ’s new announcement worked like a cherry on top.

The BOJ announced that they had widened the yield control range. It was widened for the bonds issued by the government.

This is an indication that the BOJ may continue increasing the interest rates in the upcoming year.

USD Performance VS the Asian FX

In the Thursday trading session, the DXY for the dollar has fallen by 0.3%, not a good display of performance and power by the greenback.

On the other hand, the Asian currencies have gained strength and power against the dollar. The latest FX market data shows that the value of the Chinese yuan has surged by 0.1%.

The yuan has gained strength against the dollar despite facing a major COVID-19 crisis in the country. The Indian rupee has also risen 0.2% against the dollar while the South Korean won has surged by 0.4%.

Even the NZ dollar and the AU dollar have gained strength against the dollar. Their values have surged by 0.4% and 0.8% against the US dollar.