Investing.com — Asian currencies remained largely rangebound on Thursday as the U.S. dollar held near an 18-month high, while the Japanese yen weakened as markets digested hawkish Federal Reserve minutes and fresh Japanese economic data.
The dollar’s gains were limited by expectations that the Fed will pause its tightening cycle this month.
The U.S. dollar index was around 102.24, little changed, after rising 0.3% on Wednesday and remaining close to its strongest level since April 2025. The USD/JPY pair was around 158.15, up 0.05%, while the AUD/USD pair fell 0.1% to $0.6957, while the NZD/USD pair declined 0.2% to $0.5603.
Dollar holds near highs as Fed pause bets firm
The Federal Reserve’s September meeting minutes showed policymakers continued to view inflation as the biggest risk to the U.S. outlook, although the discussion revealed divisions over the reasoning behind the quarter-point rate increase.
The minutes did little to alter expectations that the Fed will hold rates at its Oct. 28 meeting. CME FedWatch showed markets pricing a 19% probability of a 25-basis-point hike, unchanged from a day earlier.
DBS said the minutes reinforced expectations for an October pause followed by a possible December 9 hike.
The New York Fed also said one-year inflation expectations rose to a three-year high of 3.9% in September.
DBS noted that although WTI has not returned to its April peak, gasoline prices have moved back toward their 2026 high and diesel has reached new highs amid tight distillate supplies.
That could undermine the argument that U.S. energy production shields the economy from global fuel-price shocks, potentially limiting some of the dollar’s support from higher rates.
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Yen weakens as Japan data, BOJ outlook in focus
The USD/JPY pair remained around 158.15 after rising as high as 158.22.
Japan’s current-account surplus reached ¥4.062 trillion in August, above the ¥3.19 trillion median forecast, providing a stronger external-balance backdrop for the yen.
The currency nevertheless remained weak after the latest BOJ signals suggested policymakers remain divided on the timing of further increases.
Markets continue to assess the prospect of additional tightening against concerns over fiscal spending and the impact of higher yields.
The yen is also sensitive to intervention risks after Japanese officials repeatedly warned against excessive weakness.
