Investing.com — Most Asian currencies moved from flat to low on Thursday as markets looked for more clues on U.S. interest rates from Federal Reserve officials and upcoming inflation data.
The Japanese yen showed some resilience, with the pair interrupting its recent decline following somewhat hawkish comments from the Bank of Japan. Traders were also wary of further government interventions in the foreign exchange markets.
Broader Asian currencies were muted as the dollar recovered from recent losses this week after a series of Fed officials warned that persistent inflation was likely to keep interest rates high for longer.
The Japanese yen stops losing, USDJPY hovers above 155
The Japanese yen’s USDJPY pair, which is inversely representative of the yen’s strength, hovered around the mid-155s on Thursday, ending its recent losing streak.
The pause came after BOJ Governor Kazuo Ueda warned that any inflationary pressures arising from yen weakness could lead to monetary tightening by the central bank. He changed his position after saying last month that the yen’s recent declines had no direct impact on inflation.
Ueda’s comments were enough to stem losses in the yen, which had been weakening even after the Japanese government’s apparent intervention in currency markets last week.
Still, the March data raised doubts about how much leeway the BOJ actually had to tighten policy.
The Chinese yuan limits losses as imports rise
The Chinese yuan pared some intraday gains after data showed Chinese growth in April was substantially stronger than expected, suggesting some strength in domestic demand.
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Although expectations were also exceeded, the peak in imports meant that China’s growth was less than expected. Still, the trade balance expanded after hitting a four-month low a month earlier.
While increased imports generally do not bode well for the currency, the yuan was supported by optimism about a possible economic recovery in China, which supported local consumption.
Dollar Holds Stable Thanks to Fed Speakers, Inflation Data Available
Broader Asian currencies were muted, as were the currencies, stabilizing after a strong recovery this week.
The focus on Thursday and Friday was squarely on more Fed speakers, as well as key data coming out next week.
Doubts about US yields caused most Asian currencies to trade sideways on Thursday. The Australian dollar pair rose less than 0.1%, while the Singapore dollar and South Korean won pairs were flat.
The Indian rupee pair moved little but remained within sight of the record highs seen in late April.
