Asian currencies traded mixed during Thursday’s session as the U.S. dollar stabilized following the Federal Reserve’s decision to keep interest rates unchanged within the 3.75% to 4.00% range. Investors remained focused on upcoming U.S. inflation data and monetary policy decisions from central banks in Europe and Japan. The U.S. Dollar Index edged lower to 102.17, retreating from its highest level in two weeks, while the euro and British pound remained largely unchanged.
The Federal Reserve voted 10 to 2 to maintain interest rates at their current levels while upgrading its assessment of U.S. economic activity, indicating that growth continued at a strong pace. Fed Chair Kevin Warsh expressed confidence that inflation could return to the central bank’s 2% target without a significant slowdown in economic growth or a notable increase in unemployment. However, his remarks provided limited guidance on the next monetary policy move. Although investors reduced their expectations for additional interest rate increases in 2027, markets continued to price in a 78% probability of a rate hike in December.
Investors are awaiting the release of the U.S. Personal Consumption Expenditures Price Index for September to gain further insight into inflation trends and the future direction of interest rates following the Federal Reserve’s latest decision. Attention is also turning to the European Central Bank’s upcoming policy meeting, where the deposit rate is widely expected to remain unchanged at 2.50%. Markets continue to assess differences in monetary policy expectations among major central banks.
The Japanese yen strengthened slightly against the U.S. dollar, with the USD/JPY pair declining 0.1% to 157.76 ahead of the Bank of Japan’s policy decision scheduled for Friday. Markets expect the central bank to maintain its benchmark interest rate at 1.25% following September’s increase. The BOJ may also raise its inflation forecasts due to higher oil prices and the weakness of the Japanese currency. Investors will closely monitor comments from Governor Kazuo Ueda for indications of another possible interest rate increase in December.
The New Zealand dollar remained under pressure after the Reserve Bank of New Zealand unexpectedly kept interest rates unchanged at 2.75%. The currency traded at $0.5622 after falling as much as 1.7% to $0.5585 during the previous session. Meanwhile, the Australian dollar traded at $0.7055, near its highest level in a month, supported by inflation data showing consumer prices increased 1.3% in the third quarter, compared with 0.6% in the previous quarter. Investors are awaiting the Reserve Bank of Australia’s next policy meeting to assess whether the four interest rate increases implemented this year will be sufficient to bring inflation back to target.
Asian stock markets also declined during Thursday’s session, giving up earlier gains as disappointing earnings from Alphabet and selling pressure on Samsung Electronics weighed on technology and semiconductor shares. The decline coincided with a 1.5% drop in Nasdaq 100 futures during Asian trading, despite modest gains in Wall Street indices during the previous session.
Alphabet shares plunged approximately 10% in U.S. after hours trading after the company reported financial results below market expectations and indicated that heavy spending on artificial intelligence infrastructure would continue. The announcement raised concerns about potential returns on these investments. In contrast, Microsoft shares gained around 3% after the company reported stronger than expected cash flows, as investors continued to evaluate whether major technology companies could generate sufficient returns to justify their growing investments in artificial intelligence.
South Korea’s KOSPI index fell approximately 3%, pressured by a nearly 6% decline in Samsung Electronics shares despite the company reporting record third quarter earnings. The decline reflected semiconductor division profits falling short of market expectations, alongside the absence of immediate details regarding additional shareholder returns. Samsung’s mobile division also recorded an operating loss of 800 billion won as higher memory chip costs weighed on profitability. The company projected semiconductor capital expenditure of 76.8 trillion won for the current year, representing a 62% increase compared with 2025, while warning that artificial intelligence driven demand for memory chips could exceed industry supply in 2027.
Investors are now turning their attention to upcoming earnings reports from Amazon and Intel for further indications of future artificial intelligence spending and whether growing demand can support substantial investments in data centers, semiconductor chips, and cloud computing infrastructure. At the same time, markets remain focused on U.S. inflation data and monetary policy decisions in Europe and Japan, particularly as expectations for a U.S. interest rate increase in December persist alongside the possibility of another rate hike by the Bank of Japan. Currency and equity market movements in the coming sessions are therefore likely to remain sensitive to corporate earnings and changes in monetary policy expectations.
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