By WSJ Staff
The U.S. dollar saw modest gains posted in morning trade wiped out as it touched a two-week low against the Korean won of 1,110.4 won on the Reserve Bank of Australia’s surprise rate hike, further boosting market expectations for a near-term Bank of Korea rate hike, traders say.
“I’m all for (betting on) a further fall in the dollar/won from here,” as long as FX authorities don’t kick in later to intervene in support of the U.S. dollar, says a local bank trader.
The RBA raised its cash rate 0.25% to 4.75% earlier today.
Meanwhile, the U.S. dollar was quoted at a record low of 1.2882 Singapore dollars after the unexpected RBA hike, and is likely to trade with downward bias, says a currency analyst.
“The RBA move was the trigger for the U.S. dollar’s decline. Australia benefits most from growth in Asian economies, and this move highlights inflation concerns in this part of the world,” an analyst said. “It also gives a fresh focus to the divide between the U.S., which is easing, while Asia is tightening,” he said, adding that the U.S. dollar is likely to remain weak against Asian currencies.
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