Investing.com– Most Asian currencies firmed slightly on Thursday, recovering a measure of recent losses, while the dollar steadied near a seven-week peak ahead of key consumer inflation data. 

Regional currencies were nursing losses over the past week amid growing doubts over the pace of the Federal Reserve’s future interest rate cuts. 

This trend was somewhat offset by the minutes of the Fed’s September meeting showing policymakers in full support of the central bank’s 50 basis point cut then. But they also remained uncommitted over the pace of future easing. 

Some improving sentiment towards China also drove Asian currencies, as Beijing signaled plans to begin rolling out fiscal stimulus measures. 

Dollar steadies with CPI data on tap

The and fell slightly in Asian trade, but remained close to seven-week highs hit earlier this week.

Focus was squarely on inflation data due later in the day, which is likely to factor into the Fed’s plans for interest rates. The data is expected to show headline CPI inflation eased slightly, while remained sticky. 

Strong payrolls data released last week saw traders wipe out bets that the central bank will cut rates by 50 bps again in November. 

Traders were seen pricing in a 79.5% chance for a 25 bps cut in November, and a 20.5% chance for a hold, showed.

Chinese yuan firms with fiscal stimulus in focus 

The Chinese yuan’s pair fell 0.2%, reversing some recent weakness as traders looked to more stimulus measures from Beijing to support growth.

China’s finance ministry said it will hold a briefing on Saturday to outline plans for fiscal stimulus, after a raft of recent monetary stimulus measures largely disappointed markets.

Still, any more stimulus measures herald weakness in the yuan, especially if local interest rates fall further. 

Most Asian units firmed on Thursday but were nursing recent losses. The Japanese yen’s pair fell 0.1% after hitting an over two-month high. The currency took little support from stronger-than-expected inflation data, as markets bet that the Bank of Japan will face difficulty in raising interest rates further.

The South Korean won’s pair rose 0.3%, while the Singapore dollar’s pair fell slightly. 

The Indian rupee’s pair remained close to record highs, with the rupee facing weakness after the Reserve Bank of India signaled a shift away from its hawkish stance. 

The Australian dollar’s pair rose 0.2%, tracking some optimism over China.

Investing.com – The U.S. dollar stabilized near a seven-week high Thursday ahead of a key inflation report, while the euro languished near recent lows.

At 04:15 ET (08:15 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded largely unchanged at 102.684, close to seven-week highs hit earlier this week.

CPI data looms large 

The dollar is trading in a tight range Thursday, but remains at elevated levels in the wake of Friday’s strong report which prompted the market to largely rule out the chance of another 50 basis point cut in November.

The of the Fed’s September meeting showed policymakers in full support of the central bank’s 50 basis point cut then, but they also remained uncommitted over the pace of future easing.

“Reading through the September FOMC minutes, there seemed no sense of urgency from the Fed to get rates lower – even though it did cut by 50 bps,” said analysts at ING, in a note. “More a sense that the inflation scare was over, unemployment was drifting higher and a risk management approach required a recalibration of policy.”

The focus was squarely on the due later in the day, which is likely to factor into the Fed’s plans for interest rates. The data is expected to show headline CPI inflation eased slightly, while core CPI remained sticky. 

Traders were seen pricing in a 79.5% chance for a 25 bps cut in November, and a 20.5% chance for a hold, showed.

German retail sales rise

In Europe, traded largely unchanged at 1.0939, after rose 1.6% in August on a monthly basis, a small improvement from the 1.5% gain seen the prior month.

However, this good news was tempered by the German government downgrading its 2024 growth forecast, with Economy Minister Robert Habeck predicting late Wednesday that gross domestic product in the eurozone’s largest economy would shrink 0.2% this year, down from an earlier forecast of 0.3% growth.

This would mean that Germany is expecting its first two-year recession in almost two decades.

The meets next week, and is expected to ease policy once more having already cut rates twice this year.

rose 0.1% to 1.3081, ahead of the release of the Bank of England’s latest credit conditions survey as traders look for clues as to the likely path of rate cuts by the central bank going forward.

Japanese yen struggles

fell 0.1% to 149.13, after hitting an over two-month high. 

The Japanese currency took little support from stronger-than-expected producer prices, as markets bet that the Bank of Japan will face difficulty in raising interest rates further.

fell 0.1% to 7.0771, with the yuan reversing some recent weakness as traders looked to more stimulus measures from Beijing to support growth.

China’s finance ministry said it will hold a briefing on Saturday to outline plans for fiscal stimulus, after a raft of recent monetary stimulus measures largely disappointed markets.