Investing.com — Most Asian currencies held within a tight range on Friday, while the dollar suffered some weekly losses due to interest rate uncertainty, while expectations of President-elect Donald Trump’s inauguration also weighed.
China’s yuan rose slightly after fourth-quarter gross domestic product data came in better than expected. China’s economy grew in line with Beijing’s 5% forecast for this year.
Regional currencies saw some relief this week as the dollar fell from a two-year high following soft inflation data. But other data continued to point to resilience in the U.S. economy, fueling uncertainty about the interest rate outlook.
Chinese yuan strengthens slightly on strong fourth-quarter GDP
The Chinese yuan strengthened slightly, with the pair down 0.1% after hitting a more than one-year high this week.
China’s economy grew 5.4% in the fourth quarter, more than the 5% expected, after a barrage of recent stimulus measures paid off.
read 5%, in line with Beijing’s target. Other data also showed that industrial production in China grew stronger than expected in December, as did retail sales, while there were signs of improving consumer spending.
Friday’s data dump showed some resilience in the Chinese economy as it faces higher trade tariffs under Trump. But Beijing is also expected to issue more stimulus measures this year.
Currencies exposed to China saw limited movements despite hopes that the Chinese economy was improving. The Australian dollar pair strengthened slightly, as did the South Korean won and the Singapore dollar.
Elsewhere, the Indian rupee’s pair remained just below this week’s record high of over 86.6 rupees.
Japanese Yen Firmly Ahead of BOJ
The Japanese yen held near its strongest level in almost a month, with the pair hovering around 155.42 yen.
The yen strengthened sharply this week after several Bank of Japan officials suggested a rate hike was possible as the central bank hiked rates.
This came as recent data showed strong Japanese wage growth and household spending, while inflation also remained steadily above the BOJ’s 2% annual target.
A rate hike bodes well for the yen, which has been battered over the past month by fears of high U.S. interest rates.
Dollar is on the verge of breaking six-week interest rate winning streak, with Trump in focus
The and both held steady in Asian trading after falling from more than two-year highs this week. The dollar also traded down 0.7% this week, its first weekly loss after six weeks of gains.
Soft inflation data released this week raised some expectations that the Fed will still cut rates in 2025. But data showed consumer spending and the labor market remained strong, which could give the Fed more room to cut rates at a staggered pace.
Traders were also tense ahead of Trump’s inauguration on Monday. The president-elect has pledged to make sweeping policy changes from “day one” of his second term, most notably by imposing high trade tariffs on China.
