Investing.com — Asian currencies were mixed on Thursday as the U.S. dollar held near a two-month high, while the Japanese yen weakened after the Bank of Japan’s latest policy summary offered mixed signals on the pace of future rate hikes.
The dollar remained supported by elevated Treasury yields even as weaker-than-expected U.S. inflation reduced expectations for an October Fed hike.
The U.S. dollar index was around 101.58, up 0.13%, after rising about 2% in September. The greenback clocked its strongest monthly performance since June as the Federal Reserve’s renewed focus on inflation has pushed U.S. rate expectations and Treasury yields higher.
The USD/JPY pair rose 0.5% to 158.15, after the yen weakened as much as 0.5% to a two-week low of 158.21.
Global bonds suffered their largest monthly decline in years in September amid a combination of deteriorating government finances, heavy debt issuance and renewed inflation pressures.
Yen slips as BOJ signals mixed views on rate path
The yen weakened after the BOJ’s September meeting summary showed policymakers differed on the strength of domestic growth and the pace of further rate increases.
Some board members argued that the central bank should accelerate hikes or bring rates closer to its eventual target sooner, while others noted that although second-quarter growth was positive, domestic demand contracted and the economy could not necessarily be described as expanding strongly or sustainably.
Markets now price less than a 20% chance of a BOJ hike by October 30, down from more than 30% at one point Wednesday, while a December increase is fully priced.
DBS said Japan should continue to benefit from strong external demand linked to AI even as the monetary-policy outlook remains uncertain.
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Aussie tracks RBA, inflation and trade signals
The AUD/USD pair was around a two-month low of $0.69, keeping the Australian dollar below $0.70.
Australia’s trade surplus narrowed sharply to A$495 million in August from a revised A$1.35 billion in July, well below the roughly A$2 billion economists had expected.
The trade data came a day after the RBA raised its cash rate by 25 basis points to 4.60%, its highest level since 2011.
Elsewhere, the USD/CNH pair rose 0.1% to 6.72, while the USD/CNY pair was little changed at 6.70. The yuan clocked its seventh consecutive quarterly gain against the dollar in its final session before China’s National Day holiday.
