BENGALURU: Asian currencies slipped on Wednesday, as the dollar made a tentative rebound with concerns over the US Federal Reserve’s independence, while equities traded cautiously ahead of Nvidia earnings, seen as a key indicator of the AI-driven rally.
The Philippine peso led the pack lower to retreat 0.5 percent to a one-week low of 57.166 per US dollar, on track to mark its third consecutive session of losses. The Indonesian rupiah, the Malaysian ringgit and Thailand’s baht followed suit to fall 0.3 percent each.
The US dollar index, which measures the currency against six major peers, rose 0.2 percent to 98.44, recovering from a 0.24 percent decline in the previous session.
US President Donald Trump said on Monday he would fire Federal Reserve Governor Lisa Cook over alleged mortgage improprieties, though Cook’s lawyer said she will challenge the move in court.
The dollar had initially weakened after the development as investors lost confidence in the greenback following the president’s push for greater influence over monetary policy.
The key risk is that concerns over Fed independence could lead to uncertainty around inflation and the Fed’s policy credibility, said Lloyd Chan, FX strategist at MUFG.
“This may fuel increased volatility in US interest rate expectations and the US dollar, amplifying currency fluctuations across the Asia region, particularly for economies with high external vulnerabilities or high foreign portfolio exposure.”
Despite Trump’s Fed gambit dominating headlines, traders are bracing for this week’s critical catalysts: Nvidia’s earnings and the US inflation data on Friday.
Asian technology stocks rose broadly in lacklustre trade ahead of Nvidia Corp’s second-quarter results, as investors looked to the chipmaker’s demand outlook for clues about whether the global tech rally since April can continue. The US chipmaker will report after the bell on Wednesday.
Chinese AI linchpin Cambricon Technologies Corp rose as much as 8.2 percent to its highest point following a record profit. Shares of Nikon Corp added 21 percent in Japan and chipmaker Samsung Electronics rose 0.6 percent in South Korea.
Shares in Taiwan climbed as much as 1 percent to a one-week high, while those in South Korea were flat. Equities in the Philippines added 1.4 percent and shares in Indonesia and Singapore advanced 0.2 percent each, respectively.
Looking ahead, the Bank of Korea and Bangko Sentral ng Pilipinas are due to announce rate decisions on Thursday. Economists expect South Korea to hold rates steady while the Philippines is poised to cut by 25 basis points, according to economists polled by Reuters.
Bank Indonesia surprised markets last week with a 25-bp rate cut, while Thailand’s monetary policy should remain accommodative as the economy will face multiple headwinds ahead, the minutes of the central bank’s August 13 policy meeting showed.
