Dollar Holds Near 18-Month High as Asian Currencies Stay Rangebound
The U.S. dollar held near an 18-month high on Tuesday, while Asian currencies remained mostly rangebound. The euro faced further pressure, nearing a 17-month low amid fiscal concerns and rising energy costs across Europe. The dollar's strength was supported by elevated Treasury yields and persistent inflation risks, despite softer U.S. services-sector data that reduced near-term Fed rate hike expectations.
The USD/JPY pair hovered around 157.92, while the AUD/USD and NZD/USD pairs were at $0.698 and $0.560, respectively. The EUR/USD pair was near $1.1225, extending a roughly 1.2% weekly decline as political uncertainty and fiscal concerns weighed on the euro.
The Indian rupee was expected to open modestly weaker, with the USD/INR pair around 96.58. The Reserve Bank of India has been smoothing the rupee's decline through market intervention, preventing a sharper depreciation. The rupee is now about 0.6% away from its record low near 96.96 reached in May.
Regional currencies awaited policy and growth signals. The Chinese yuan remained steady, with the USD/CNY pair around 6.702. The USD/KRW pair was around 1,341.40, while USD/SGD was at 1.2791. Analysts noted varying economic challenges across Asia, including inflation risks in Indonesia, potential rate hikes in Malaysia, and fiscal pressures in the Philippines.