Asian currencies showed mixed movements on Thursday as the U.S. dollar stabilized following the Federal Reserve's decision to keep interest rates unchanged. Investors are now focusing on upcoming U.S. inflation data and policy decisions from the European Central Bank and the Bank of Japan.
The Japanese yen saw a slight increase ahead of the Bank of Japan's policy decision on Friday, while the New Zealand dollar steadied after a sharp drop following the Reserve Bank of New Zealand's unexpected rate hold. The Bank of Japan is expected to maintain its policy rate at 1.25%, after a recent increase last month.
The U.S. dollar index slipped to 102.17, retreating from a two-week high after Fed Chair Kevin Warsh's press conference. The euro and sterling remained relatively unchanged, with the dollar-yen pair falling 0.1% to 157.76. The Australian dollar traded near a one-month high at $0.7055, while the New Zealand dollar was at $0.5622.
The Federal Reserve's decision to hold rates was met with a 10-2 vote, upgrading its economic growth assessment to describe activity as expanding at a strong pace. Warsh expressed confidence in reaching the 2% inflation target without significantly slowing growth or increasing unemployment. Markets currently price in a 78% probability of a December rate hike, according to the CME FedWatch tool.
Investors are also awaiting the ECB's policy announcement, where the deposit rate is expected to remain at 2.50%. The Australian dollar's rise was supported by quarterly inflation data showing a 1.3% increase in consumer prices, up from 0.6% in the previous quarter. Reserve Bank of Australia Governor Michele Bullock indicated that the central bank will assess whether this year's four rate increases are sufficient to control inflation.
Regional currency movements were uneven, with the dollar-krona pair dropping 0.6% to 1,333.51, indicating a stronger South Korean won. The dollar-yuan pair rose 0.07% to 95.290, and the dollar-Indonesian rupiah pair gained 0.16% to 33.744. The dollar-Taiwan dollar pair increased 0.5% to 32.554, signaling a weaker Taiwan dollar.