Asian Currencies Steady as Rate-Cut Bets Rise; Aussie and Kiwi Dollars Outperform

Asian currencies held largely steady on Wednesday as traders assessed growing expectations of a U.S. Federal Reserve rate cut next month, while the Australian and New Zealand dollars strengthened on key domestic triggers. The U.S. Dollar Index remained muted during Asian trading hours after a sharp 0.5% drop overnight, with Dollar Index Futuresalso stable around 04:48 GMT.

Market sentiment continued to shift toward monetary easing after softer U.S. retail sales and producer price data supported views that inflation is easing. Fed funds futures now price in nearly an 84% chance of a 25-basis-point rate cut, though uncertainty lingers as several Fed officials maintain a meeting-by-meeting strategy. Adding to the focus, Kevin Hasset, Director of the White House Council, has emerged as a leading candidate for the next Federal Reserve Chair, a development analysts say could influence future rate dynamics.

The U.S. dollar’s overnight weakness allowed many Asian currencies to firm, though most traded flat on Wednesday. The Japanese yen stabilized after USD/JPY slipped 0.5% on a report suggesting the Bank of Japan may consider a rate hike as early as next month amid renewed concerns about yen depreciation. The South Korean won dipped 0.1%, the Singapore dollar traded unchanged, and the Indian rupee inched 0.1% higher. Both onshore and offshore Chinese yuanpairs were largely steady.

The Australian dollar outperformed, rising 0.6% after hotter-than-expected October CPI data signaled persistent inflation, reducing expectations of a December rate cut by the Reserve Bank of Australia. Meanwhile, the New Zealand dollar surged 1.2% after the RBNZ cut its cash rate to 2.25% as forecast but signaled the easing cycle may now be complete, projecting a rate of 2.20% in early 2026.