Investing.com — Most Asian currencies rose slightly on Friday, benefiting from a decline in the dollar as markets braced for key U.S. payroll data that will likely play a role in interest rates.
The dollar was also under pressure from a recovery in the Japanese yen, which moved further from a 34-year low amid what appeared to be government intervention in currency markets.
The dollar’s weakness gave regional currencies some breathing room, although they still posted steep losses on the prospect of US interest rates staying high for longer.
Japanese Yen Firms Amid Probable Intervention, USDJPY At Three-Week Low
The Japanese yen rose sharply on Friday, with the pair – which moves in the opposite direction of the yen’s strength – falling 0.4% to 153.02. The pair briefly hit a three-week low of 152.9.
The USDJPY pair is expected to lose around 3.4% this week as it fell from a 34-year high. Traders and analysts attributed the decline largely to foreign exchange market interventions by the Japanese government.
The USDJPY pair had risen to 160 earlier this week. Traders said this level was the new line in the sand for foreign exchange market intervention.
Japan’s domestic markets were closed on Friday. But lower volumes also helped the yen.
Still, the factors that had fueled the yen’s recent weakness continued to play a role, especially the prospect of prolonged high US interest rates.
Broader Asian currencies rose slightly, benefiting from an overnight decline in the dollar. The Australian dollar pair rose 0.2% as markets positioned for potentially aggressive signals next week. Warmer-than-expected inflation data in Australia meant markets largely priced in expectations of any rate cuts from the RBA in 2024, providing some strength for Australians.
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Trading volumes in Asia remained subdued due to market holidays in Japan and China.
The South Korean won pair fell 0.3%, while the Singapore dollar pair fell 0.1%.
The Indian rupee pair fell slightly and traded well below April’s record highs.
The dollar held steady after overnight losses, nonfarm payrolls waited
Trading in Asia was steady after plunging in overnight trading as pressure from the yen and expectations that the Federal Reserve would stop raising interest rates dented the dollar.
The focus was now squarely on the April data, which will be released later in the day. The data has consistently beat expectations over the past five months, with signs of continued strength in the labor market giving the Fed more leeway to keep rates high for longer.
The Fed said earlier this week that it has no plans to cut rates in the near term, especially in light of persistent inflation.
