The US dollar held close to an 11-week peak on Thursday, driven by strong economic resilience in the United States and market expectations that the Federal Reserve may adopt a less aggressive stance on rate cuts compared to other central banks. Investors are keeping a close watch on an upcoming press briefing in China that could introduce new measures to support the struggling property sector.
The outcome of this event could significantly influence market movements, including decisions to invest in stocks and play a crucial role in stabilising the Chinese economy.
Market awaits China property briefing
The primary focus in Asia is on a press conference scheduled at 0200 GMT in China, where officials are expected to announce measures aimed at bolstering the property market. This development is vital for restoring the country's economic stability and could determine the trajectory of Chinese stock markets. Ahead of the event, the offshore yuan rose slightly by 0.04%, reaching 7.1328 per dollar.
The Australian dollar, which often serves as a proxy for the Chinese yuan in global currency trading, declined 0.02% to $0.6665. It hovered near a one-month low, largely due to investor disappointment over China's lack of detailed economic stimulus. This has also limited further gains in Chinese equities.
Analyst outlook on China’s property measures
Rodrigo Catril, a senior currency strategist at National Australia Bank, noted the market's cautious stance. "We are closely watching China, expecting a press conference that may offer more rhetoric than substance. It is unlikely that we will see concrete numbers today, but we are hoping for more insights into what stabilising the housing market might entail," he said.
The announcement is anticipated to provide some guidance on China's economic strategies, although substantial policy shifts seem uncertain.
Dollar maintains strength against peers
The US dollar continued to exhibit strength, following its recent rise to an 11-week high against a basket of major currencies. In contrast, sterling remained flat at $1.2991, near a two-month low, as weaker-than-expected UK inflation figures weighed on the currency. The Japanese yen traded at 149.47 per dollar, close to the critical 150 mark.
At the same time, the euro edged down 0.02% to $1.0859 ahead of the European Central Bank's policy decision, which is expected to involve another rate cut.
The dollar’s robust performance has been underpinned by a series of encouraging US economic reports, which have prompted traders to scale back expectations of aggressive rate cuts by the Federal Reserve. Additionally, political factors, including the possibility of Republican candidate Donald Trump's victory in the upcoming election, have added to the dollar's appeal.
Analysts suggest that Trump's policies on tariffs, immigration, and taxation could lead to a more inflationary environment in the US, potentially curbing the scope for significant Fed rate reductions.
Broader market movements
Elsewhere, the New Zealand dollar rose by 0.07% to $0.6061, following a two-month low earlier in the week. The uptick came after domestic inflation figures fell within the Reserve Bank of New Zealand's target range of 1% to 3% for the third quarter, keeping open the possibility of further rate cuts by the central bank.
The US dollar index was last steady at 103.51, having peaked at 103.60 in the previous session. As investors look for opportunities to invest in stocks, the ongoing economic developments in China and the US will likely shape currency movements and broader market trends in the coming weeks.
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