Asian Market Lull: Dollar Drifts Ahead of U.S. Thanksgiving

Asian markets experienced a subdued trading session on Thursday, with investors hesitant to place major bets ahead of the U.S. Thanksgiving holiday. The U.S. dollar drifted lower, weighed down by lower Treasury yields and a stronger yen. Traders remained cautious as they awaited more clarity on the Federal Reserve's next move and the potential impact of U.S. President-elect Donald Trump's policies on Asian economies.

The MSCI Asia Pacific Index slipped 0.07%, while Japan's Nikkei 225 edged up 0.46%. Sentiment remained frail as investors pondered the possibility of a tariff war sparked by Trump's policies. Data on Wednesday showed U.S. consumer spending increased slightly more than markets expected in October, but progress on lowering the rate of inflation appears to have stalled in recent months.

The lack of success in bringing inflation back to the Fed's 2% target, together with the prospect of higher tariffs on imported goods, could narrow the scope for interest rate cuts next year. While the Fed is still widely expected to deliver a third rate reduction in December, minutes of the Federal Open Market Committee's Nov. 6-7 policy meeting published on Tuesday showed officials appeared divided over how much farther they may need to cut rates.



South Korea's central bank cut benchmark interest rates for a second consecutive meeting on Thursday as the economy stalled and inflation slowed more than policymakers predicted. The won weakened after the decision, reflecting market uncertainty. The yen was 0.3% lower at 151.615 per dollar but remained close to the one-month high it touched in the previous session. The Asian currency is headed for its strongest weekly performance since early September on growing expectations of a rate hike from the Bank of Japan next month.

Oil prices were steady as worry over supply eased after a ceasefire deal between Israel and Hezbollah. Brent crude futures were little changed at $72.8 a barrel. U.S. West Texas Intermediate crude was steady at $68.7. Spot gold eased to $2,626 per ounce.

In conclusion, the Asian market experienced a lull on Thursday, with investors hesitant to place major bets ahead of the U.S. Thanksgiving holiday. The U.S. dollar drifted lower, weighed down by lower Treasury yields and a stronger yen. Traders remained cautious as they awaited more clarity on the Federal Reserve's next move and the potential impact of U.S. President-elect Donald Trump's policies on Asian economies. The lack of progress in slowing inflation and the prospect of higher tariffs could narrow the scope for interest rate cuts next year. South Korea's central bank cut benchmark interest rates, and the yen remained close to a one-month high. Oil prices were steady, and gold eased slightly.