Asian currencies could be on the ‘backfoot’ despite likely U.S. rate cuts this year, JPMorgan says

Asian currencies could be on the "backfoot" this year despite signals that the U.S. Federal Reserve could cut interest rates soon, according to Julia Wang, executive director and global market strategist at JPMorgan Private Bank. 

Emerging market currencies often stand to gain when the Fed cuts interest rates and the U.S. dollar weakens.

But Wang said this might not be the case in 2024 as the U.S. dollar is expected to benefit from forecasts shifting to a soft landing for the U.S. economy rather than a recession. 

"The dollar probably could remain somewhat resilient," Wang told CNBC's Squawk Box Asia on Wednesday.

It will be the U.S. presidential elections and uncertainty in the China economy may continue supporting the U.S. dollar at the end of this year, said Saktiandi Supaat, head of FX strategy at Maybank.

"The Asian currencies are not appreciating, it's actually the dollar is positively correlated with the performance of [the] U.S. equity market because it's a soft landing narrative, rather than a recession narrative around those rate cut bets," Wang said.

However, Supaat, pointed out that Asian currencies did rally last year when there where expectations that the Fed was going to cut rates.

Admitting that this is a "slightly more contrarian view," Wang said that Asian currencies could stay on the "backfoot" and domestic demand in the region could be weaker than typical easing cycles.

Several analysts have said that Asian currencies such as the Chinese yuan and Indian rupee could strengthen from U.S. interest rate cuts later this year, with the Korean won likely to be one of the major beneficiaries.

Simon Harvey​​​​, head of FX analysis at Monex, predicted that the won could gain anywhere between 5% and 10% if the U.S.