Asian currencies traded in narrow ranges as investors weighed mixed signals from the Fed and the RBA’s decision to hold rates. The U.S. dollar hovered near a three-month high, reflecting a cautious tone across global forex markets.
Asian currencies opened the week on a subdued note, with most trading flat on Tuesday (Nov 4) as investors assessed mixed signals from the U.S. Federal Reserve (Fed) about the path of interest rates. Meanwhile, the Australian dollar (AUD) showed little reaction after the Reserve Bank of Australia (RBA) decided to hold rates steady.
The U.S. dollar remained close to its three-month peak, supported by expectations that the Fed will keep borrowing costs higher for longer — underscoring the cautious sentiment dominating global markets.
According to Reuters, investors are treading carefully after a series of conflicting comments from Fed officials in recent days. Last week, Fed Chair Jerome Powell struck a hawkish tone, warning that policymakers would remain cautious even after making their first rate cut in the current cycle back in September.
Fed Governor Lisa Cook said the December meeting remains a “live” one for another possible rate cut, but emphasized that monetary policy is “not on a pre-set course.” In contrast, Governor Stephen Miran argued that rates might still be too tight and could stifle long-term growth.
San Francisco Fed President Mary Daly took a more moderate stance, describing the latest cut as “insurance” and stressing that the central bank should “watch the data closely” before making further moves.
These varying perspectives highlight growing divisions within the Fed — a sign that investors will continue to face uncertainty over the policy trajectory in the months ahead. The uncertainty is compounded by the ongoing U.S. government shutdown, which has delayed the release of key economic indicators, including the closely watched jobs report.
The U.S. Dollar Index — which tracks the greenback against six major peers — hovered near its highest level since August. The dollar’s resilience reflects both the Fed’s “higher-for-longer” stance and a broader shift toward safe-haven assets amid global economic and political uncertainty.
Data from Reuters showed the euro trading around $1.07, slightly lower from last week, while the British pound edged down 0.2%. The Japanese yen continued to face pressure, with USD/JPY hovering near 153 — a level that has fueled speculation of possible intervention by Japan’s Ministry of Finance.
Analysts say that as long as the dollar maintains its strength, most Asian currencies will remain under downward pressure, particularly in an environment of tightening global liquidity.
The Reserve Bank of Australia kept its benchmark interest rate unchanged at 3.60% during its November meeting, as widely expected. The central bank stated that inflation remains significantly above its target and that it will take more time to bring price pressures back to normal levels.
The RBA gave no clear indication of when a new easing cycle might begin, signaling a cautious policy outlook.
Following the announcement, the AUD initially dipped by 0.2% against the U.S. dollar before recovering to around $0.6530. The muted reaction reflects investors’ cautious stance amid uncertainty about both the RBA’s and the Fed’s next moves.
Across the region, currencies traded in tight ranges. The Japanese yen fell 0.2%, the Singapore dollar was little changed, and the South Korean won edged 0.7% higher against the greenback.
Analysts warn that this apparent calm could be deceptive. The current low-volatility environment may represent “the quiet before the storm,” as the market awaits key U.S. economic data and further policy guidance from the Fed.
All eyes remain on upcoming comments from Fed Chair Jerome Powell and the release of the Fed’s latest meeting minutes. If the central bank signals that rates will stay elevated for longer, the U.S. dollar could extend its rally.
Upcoming manufacturing and trade data from China — Australia’s largest trading partner — will play a critical role in shaping sentiment. Any signs of recovery in China’s economy could boost commodity-linked currencies such as the AUD and NZD.
Tensions in the Middle East and the ongoing U.S. government shutdown have heightened global risk aversion, driving investors toward safe-haven assets like the U.S. dollar and gold. Unless Congress resolves the budget deadlock, uncertainty will likely persist through the week.
In this period of uncertainty, market strategists suggest the following approaches:
Maintain defensive positions: Favor the U.S. dollar and avoid excessive exposure to high-risk currencies.
Monitor central bank communication: Every speech and data release can shift expectations around monetary policy.
Diversify portfolios: Include gold, government bonds, and stable currencies such as the Swiss franc (CHF) or Singapore dollar (SGD).
Stay alert to geopolitical developments: Events in the Middle East or renewed U.S.-China trade tensions could impact forex sentiment unexpectedly.
Asian currencies have entered the first week of November in a calm yet cautious mode. The U.S. dollar continues to dominate the landscape as investors digest the Fed’s mixed signals and brace for potential policy surprises. Meanwhile, regional currencies like the AUD, JPY, and SGD remain directionless, reflecting the broader sense of hesitation in global markets.
For traders, this is a moment to stay disciplined rather than complacent. The current calm may not last long — any shift in Fed rhetoric or U.S. economic data could quickly reverse market trends. As uncertainty persists, the key will be balancing caution with readiness for volatility.
1. Why is the U.S. dollar still strong even after the Fed started cutting rates?
Because Fed officials have emphasized that rates will remain high for longer, keeping the dollar attractive as a safe-haven asset.
2. Why did the RBA keep interest rates unchanged?
The RBA believes inflation remains above target and wants more time to assess the impact of previous rate hikes before easing policy.
3. Can the Australian dollar rebound soon?
That depends on China’s economic data and the strength of the U.S. dollar. If global growth improves, the AUD could see moderate recovery.
4. When is forex market volatility likely to pick up again?
Volatility could rise after the release of delayed U.S. economic data and the Fed’s meeting minutes later this month. Geopolitical tensions could also trigger sudden moves.
Tiếng Việt
English
