Investing.com– Most Asian currencies firmed on Thursday, tracking weakness in the dollar as soft labor data continued to trickle in, ramping up bets that the Federal Reserve will begin cutting rates in the coming months.

The greenback hovered just above a two-month low, and remained on the backfoot as expectations of rate cuts drove traders into more risk-driven assets. U.S. Treasury yields also retreated.

Dollar near 2-mth low, Sept rate cut bets grow 

The and both fell about 0.2% in Asian trade, remaining close to their weakest levels since early-April.

The greenback saw renewed weakness on Wednesday after soft pointed to further cooling in the labor market.

The reading came after a soft job openings print, and also set the stage for a soft reading on Friday. 

Other economic indicators also pointed to some cooling in the world’s biggest economy, which could present a softer outlook for inflation and give the Fed more confidence to begin cutting rates. 

Traders were seen that the central bank will cut rates by 25 basis points in September. 

This notion boosted most Asian currencies. The Japanese yen’s pair fell 0.3% and remained well below recent peaks. The Bank of Japan is set to meet next week and is expected to potentially tighten policy then.

The Australian dollar’s pair rose nearly 0.3%, even as trade data showed the country’s and fell sharply in April. But its widened. 

The Chinese yuan’s pair fell marginally, but remained close to six-month highs hit in May. Sentiment towards China soured in recent sessions as traders awaited more cues on the country’s plans to shore up economic growth. Key trade data was also on tap this week. 

The Singapore dollar’s pair fell 0.2%, while the South Korean won’s pair fell 0.1% in holiday trade.

Indian rupee weak amid post-election volatility 

The Indian rupee’s pair, which gauges the number of rupees needed to buy one dollar, remained close to record highs of over 83 rupees on Thursday.

The Indian currency saw wild swings this weeks, briefly hitting record lows after the results of the 2024 general elections showed the incumbent BJP-led alliance won a much smaller majority than expected. The results presented a difficult third term for Prime Minister Narendra Modi, especially with regards to rolling out economic reforms.