Investing.com — Most Asian currencies fell on Friday, with the Chinese yuan returning to a six-month low after disappointing business activity data, while the dollar held steady ahead of key inflation data.
Regional currencies also remained under pressure due to lingering concerns about US interest rates remaining high for a long time to come, while aggressive comments from Federal Reserve officials continued to filter in.
But they saw some relief on Thursday as the dollar fell from a two-week high following a softer reading of gross domestic product data.
Dollar Holds Stable After Overnight Losses, PCE Test Await
Trading in Asia rose 0.1%, leveling off overnight losses, after a revised first-quarter reading showed the economy grew less than initially expected.
These figures indicated a cooling in the US economy, raising hopes that the Fed could eventually tone down its aggressive stance to promote economic growth.
But fears of persistent inflation and high interest rates remained in focus, with the numbers – the Fed’s favorite inflation gauge – due later on Friday.
Inflation is expected to cool slightly in April but remain well above the Fed’s annual target of 2%.
The Chinese Yuan Weakens as PMIs Disappoint; more central stimuli
The Chinese yuan pair rose 0.1%, returning to a six-month high hit earlier this week.
Data from the Purchasing Managers’ Index shows that Chinese business activity deteriorated in May, after some improvement in the past two months. unexpectedly fell back into contraction territory, while growth was slower than expected.
While the data provided new headwinds for the Chinese economy, they also fueled bets on higher stimulus spending from Beijing to support growth. But this spending – which is likely to entail easing monetary conditions – likely does not bode well for the yuan.
Other currencies exposed to China moved from flat to low. The Australian dollar pair rose slightly, while the South Korean won pair rose 0.5%.
The Singapore dollar pair rose almost 0.1%.
Among other Asian currencies, the Japanese yen pair moved little on Friday after falling sharply in overnight trading, tracking some weakness in the dollar.
showed that inflation in the Japanese capital grew as expected in May, although it still remained relatively weak. Soft inflation is a bad omen for the yen, as it gives the Bank of Japan less incentive to raise rates.
The Indian rupee pair remained close to recent record highs, above 83 rupees, ahead of the 2024 general election results on June 4.
