Asian currencies slipped slightly as markets awaited the delayed U.S. jobs report and uncertainty grew over the Federal Reserve’s interest rate outlook, while the dollar held firm, supported by the cautious tone from Fed officials regarding any potential rate cuts. The U.S. Dollar Index edged up by 0.1%.
The upcoming September U.S. jobs data is expected to offer fresh insights into labor-market strength and wage pressures, potentially reshaping interest-rate expectations. Despite persistent inflation and resilient economic growth, markets are still pricing in only a limited chance of a 25-basis-point rate cut in December. Uncertainty increased further after President Donald Trump announced his preferred candidate for the Federal Reserve chair, raising concerns about central bank independence.
In Japan, the economic spotlight shifted to a sharp surge in long-term government bond yields to their highest levels in decades, driven by fears of expanding fiscal policies and rising debt levels. This move influenced the yen’s performance, which stabilized after falling to a nine-month low, with the USD/JPY pair trading near 155.40. These movements underline the yen’s sensitivity to bond market developments and interest-rate expectations in both Tokyo and Washington.
Elsewhere in the region, Asian currencies saw limited fluctuations. The dollar rose slightly against the Singapore dollar and the Indian rupee, remained stable against the onshore Chinese yuan, and posted a modest gain in offshore trading. Meanwhile, the Australian dollar fell around 0.4% despite steady wage growth in the third quarter, reinforcing expectations that the Reserve Bank of Australia will keep interest rates unchanged.
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