The US Dollar gained traction in Asian markets on Friday as the Pound and Yen weakened, while softer-than-expected Chinese trade data dampened investor sentiment across the region.
The Dollar index, which tracks the currency’s performance against six major peers, rose 0.1% to 99.796.
The greenback has regained some ground after expectations of a Fed rate cut wiped out its month-to-date gains on Thursday, though the index remains stuck within the same trading range it has held since August, Reuters reports.
Markets are navigating in the dark, relying solely on private-sector data. To some extent, the usual correlations have broken down. There’s no clear major trend in the Dollar, so in Asia, currencies are largely following overall market sentiment.
With the US government shutdown delaying the release of the monthly non-farm payrolls report, traders are relying on private-sector data, which indicate job losses in October within the government and retail sectors.
In addition, cost-cutting measures and increased adoption of artificial intelligence have contributed to a rise in layoffs.
Traders increased their bets on a rate cut, despite Chicago Federal Reserve President Austan Goolsbee warning on Thursday that the absence of official inflation data during the government shutdown “accentuates” his caution about further rate reductions. “When it’s foggy, let’s just be a little careful and slow down,” he said to CNBC.
Fed funds futures indicate a 70% probability of a rate cut at the US central bank’s 10th December meeting, up from 62% the previous day, according to CME Group’s FedWatch tool.
Furthermore, the Dollar also gained 0.2% against the Yen, reaching 153.27, after data showed Japanese household spending in September increased 1.8% year-on-year, slightly below the median market forecast of a 2.5% rise.
The Australian Dollar remained steady at $0.64785, while the New Zealand Dollar fell 0.2% to $0.5620.
Elsewhere, the Pound slipped 0.2% to $1.31195 following the Bank of England’s decision to keep interest rates unchanged in a 5-4 vote, with Governor Andrew Bailey casting the deciding vote.
Chancellor Rachel Reeves informed the country’s budget watchdog that an increase in personal taxes is among the “major measures” she plans to unveil in her upcoming budget, The Times reported on Thursday.
Meanwhile, the Euro fell 0.1% to $1.1535, moving slightly below a one-week high.