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Asian currencies steady as dollar strengthens ahead of Fed meeting, yen hits 4-month lows.

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Most Asian currencies remained stable on Wednesday as investors awaited more signals on potential interest rate cuts from the Federal Reserve, keeping the dollar at two-week highs. The Japanese yen saw losses after the Bank of Japan maintained accommodative conditions to support the economy, marking a shift from its previous policies. The focus was on the outcome of the Fed meeting later in the day, with expectations for potential rate cuts and insights from Fed Chair Jerome Powell.

The weakness in the yen led to the USDJPY pair reaching a four-month high and the EURJPY pair testing 2008 peaks, with analysts pointing to U.S. interest rates as the key driver for the yen’s movements. The anticipation of Fed signals kept broader Asian currencies in a holding pattern, with the Australian dollar and the Chinese yuan seeing minimal changes. The South Korean won and the Singapore dollar also saw little movement, while the NZD/USD pair rose above the 0.83 level amid a cautious market sentiment.

Overall, Asian currencies remained steady as investors awaited guidance from the Federal Reserve on potential interest rate cuts, particularly in light of recent inflation data. The yen’s decline against major currencies such as the dollar and the euro reflected market expectations of accommodative central bank policies in Japan. Moving forward, market participants will closely monitor any signals from the Fed meeting and statements from policymakers for insights into the future direction of monetary policy and its impact on Asian currencies.

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