Most Asian currencies traded in narrow ranges on Wednesday as a firmer U.S. dollar and caution ahead of the Trump-Xi summit offset optimism stemming from falling oil prices.
Regional trading volumes were subdued due to a market holiday in Japan. The USD/JPY pair rose 0.2%, indicating a weaker yen, while the dollar index and dollar futures gained around 0.1% during Asian trading.
Investors focused on Chinese President Xi Jinping’s visit to Washington, where he is scheduled to hold high-level talks with U.S. President Donald Trump. Markets are watching for developments involving trade, artificial intelligence, rare earth exports and Chinese purchases of U.S. agricultural products.
The two leaders are also expected to discuss the existing U.S.-China trade truce before its early-November expiration. The Iran conflict could also feature in the talks after Trump said U.S. and Iranian officials held discussions on the sidelines of a United Nations meeting in New York.
The Chinese yuan remained largely stable, with USD/CNY edging 0.05% higher. Oil prices fell sharply amid renewed diplomatic hopes, providing some relief to Asian currencies by easing concerns over energy costs and inflation.
The Australian dollar was among the weaker regional currencies, with AUD/USD falling 0.15% after September purchasing managers index data pointed to softer economic activity. Manufacturing PMI slipped into contraction, while services growth slowed significantly. Overall business activity remained in expansion, but persistent inflation and higher interest rates continued to pressure the economy.
The weak data raised questions about how much room the Reserve Bank of Australia has for additional tightening. The RBA is widely expected to raise rates by 25 basis points next week, which would mark its fourth increase this year.
Elsewhere, Asian currencies were relatively quiet. USD/SGD gained 0.08% ahead of Singapore inflation data, while USD/INR was broadly unchanged. The South Korean won weakened modestly, with USD/KRW rising about 0.1%.
