Asian Currencies Hold Steady as Fed Signals Caution, RBA Decision in Focus

Most Asian currencies traded in narrow ranges on Monday, extending their subdued performance against the U.S. dollar after the Federal Reserve tempered expectations for a December rate cut. The dollar index hovered near a three-month high, supported by cautious sentiment and robust economic signals.

The Chinese yuan found limited support despite a new U.S.-China trade deal aimed at securing rare earth supplies for at least a year. The USD/CNY pair traded around 7.116, slightly higher after touching a one-year low last week. Meanwhile, China’s private manufacturing PMI data showed slower growth in October, although the sector remained in expansion territory, contrasting with government data indicating contraction.

The Japanese yen lingered near a nine-month low, with USD/JPY flat around 154. A market holiday in Japan kept trading volumes muted, while investors remained dovish on the Bank of Japan’s rate hike prospects.

In Australia, the AUD/USD pair moved sideways ahead of Tuesday’s Reserve Bank of Australia meeting. The RBA is widely expected to keep rates unchanged but may maintain a hawkish tone after stronger-than-expected third-quarter inflation. Comments from Governor Michele Bullock will be closely monitored for future policy cues.

Elsewhere, regional currencies saw little movement. The Singapore dollar (USD/SGD) rose 0.1%, the Taiwan dollar (USD/TWD) edged higher, and the Indian rupee (USD/INR) traded near record lows at 89 per dollar.

Investors are now focused on upcoming private U.S. labor market data after a prolonged government shutdown delayed official economic reports. Fed Chair Jerome Powell’s recent comments—downplaying immediate rate cuts following a 25-basis-point reduction—bolstered the greenback’s strength, setting a cautious tone for global currency markets.