Asian currencies experienced a significant rise on Wednesday as U.S. consumer price data released the previous day strengthened market expectations of a potential interest rate cut by the Federal Reserve by May 2024. The decline in consumer prices and a slower-than-expected rise in core inflation over the past two years led to an earlier expectations of softening interest rate hikes, resulting in a bullish mood across Asian markets.
In response to inflation data, yields on U.S. Treasury bonds fell, with the yield on the two-year approaching 4.80% and the yield on the 10-year at 4.44%. This decline in yields increased expectations of a more accommodative stance from the Federal Reserve regarding monetary policy.
The U.S. dollar index, which measures the U.S. currency against a basket of other major currencies, fell to around 104, indicating a shift in investor sentiment towards high-risk assets
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