Asian currencies tick up

Asian currencies posted modest gains on Wednesday as caution ahead of the Federal Reserve decision due later capped strength in regional units against the dollar after US President Donald Trump's State of the Union address. Regional currencies are set to post some of their best monthly gains in years, thanks to the dollar's steep decline over January as investors look at the prospect of central bank policy tightening outside of the United States.
Trump in his address on Thursday urged Republicans and Democrats to work toward compromises on immigration and infrastructure, and also said he hoped to improve infrastructure in the country. "The dollar is slightly softer as Trump's State of the Union speech did not make any mention of a strong dollar, which was something he said last week at an interview in Davos," said Christopher Wong, an FX strategist with Maybank.
In Asia, the South Korean won led gains, rising 0.4 percent to the dollar. Asian currencies are usually quick to pounce on dollar weakness, although apprehension over the Fed meeting later in the day capped gains for the day. The won was on track to gain marginally in January, compared with a 1.7 percent rise in the previous month. The Chinese yuan was mostly flat to the dollar, but was on track for its best month of gains since 1994.
Growth in the country's manufacturing sector however, slowed more than expected in January to an 8-month low in the face of a cooling property market and tighter pollution rules. The Taiwan dollar rose slightly against the dollar. The island's economy is expected to have grown 2.5 percent in the fourth quarter, according to Thomson Reuters data. The Malaysian ringgit did not trade on account of a market holiday.
The Indonesian rupiah rose about 0.3 percent to the dollar, while the Thai Baht rose about 0.2 percent. Commodity exporters like Indonesia and Thailand have seen their currencies benefit greatly over the past year due to an uptick in commodity prices. The rupiah was set for its best month since September 2016, while the baht was on track for its best month since 2008.