On Thursday, the US Dollar index dropped 0.3% to 100.91 during Asia’s morning session – its lowest level since April 2022, according to Refinitiv data – as the Fed settled on a 25 basis point interest rate hike. Overnight, it reached an all-time low of 101.036 after Fed Chair Jerome Powell expressed that their attempts to quell inflation were experiencing some progress while giving a minimal indication that they would be ending their hiking cycle in the near future.
Fed’s Latest Decisions Caused Asian Markets to Rise
The Asian currencies saw a strengthening today, with the Japanese yen rising by 0.4% to 128.43 in comparison to the US dollar and the Korean won hiking up 0.3%, standing at 1,218.6 against it. The onshore Chinese yuan also experienced an increase of 0.43%, attaining 6.7115 when measured versus its American counterpart.
According to Refinitiv data, the DXY had decreased by more than 10% in just three months and is nearly eradicating all of its gains from the past year before further interest rate hikes of the Fed were put into place. Stephanie Holtze-Jen, Asia-Pacific Chief Investment Officer at Deutsche Bank International Private Bank, believes this turnaround in the dollar index will be advantageous for regional currencies. She expressed her opinion on CNBC’s “Street Signs Asia,” stating that a conclusion to its sustained strength is near: “The relentless US dollar strength, we will see an end to it.”
The New Data To Be Published Next Week Will Create A Clearer Visual
On Friday, Steven Englander, managing director of Standard Chartered Bank, noted that the upcoming jobs data will determine how far the US dollar index will sink. He commented that if it meets expectations and falls as expected, then “the market will say, yeah, we were right.” But he added that even if those numbers support this narrative, there’s still ample room for further depreciation of the US dollar.
Later this week, the U.S. Bureau of Labor Statistics will unveil their assessment on nonfarm payrolls for the month – and economists interviewed are anticipating a surge in growth at 187,000
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