Asian Asset Rally Faces Short-Term Selling Pressure Amid Inflation Fears
Asian financial markets and currencies are bracing for short-term selling pressure that may hamper the region's asset rally, according to MUFG Senior Currency Analyst Michael Wan.
A key factor driving this sentiment is the recent surge in US core inflation, which rose 0.3% month on month in August 2026, exceeding market consensus.
This development has fueled market expectations of monetary tightening by the Federal Reserve ahead of its FOMC meeting, with Fed Fund Futures markets now pricing in an 88% probability of a rate hike in September, along with a 2027 terminal rate of 4.53%.
The escalation of the conflict in the Middle East has also pushed crude oil prices close to US$107 a barrel, intensifying pressure on Asian currencies and adding to inflation concerns in crude oil-importing countries.