Investing.com — Most Asian currencies traded within tight ranges on Friday as growing risk aversion in global financial markets drove some safe-haven flows into the dollar, while markets awaited key non-farm payrolls data for more clues.
However, the Japanese yen held steady after a hawkish Bank of Japan sparked a rally in the currency this week, pushing it to its strongest level since late March. The currency also faced some safe-haven bids as a global carry trade continued to be undone.
While global stock markets posted steep losses on concerns about slowing economic growth, losses in currency markets were limited by the prospect of US interest rate cuts in the coming months. This idea also limited the strength of the dollar.
Yen Stable, USDJPY Tests 148 on Aggressive BOJ
The Japanese yen held steady after a strong rally on Friday, with the pair hovering around 149.50 yen. The pair had fallen to 148.88 yen earlier in the day.
The yen rose this week after the BOJ, marking more potential gains in 2024, citing some improving trends in the Japanese economy.
Data on Friday showed Japan’s value – the change in the total amount of yen in circulation – rose more than expected in July, heralding a rebound in inflation in the coming months.
The BOJ said inflation is likely to pick up on higher domestic wages, bringing a more aggressive outlook for the central bank this year.
Dollar recovers some losses, non-farm payrolls available
Trading in Asia was steady after a recovery in overnight trading as the dollar benefited from safe-haven demand.
The dollar recovered some losses from earlier this week after the Federal Reserve noted the possibility of a rate cut in September.
Weak economic data boosted expectations of a rate cut in September as data showed an outsized contraction in industrial activity in June.
The focus was now squarely on upcoming data for further clues to the economy, with any further signs of a cooling labor market likely to increase expectations for a rate cut.
The broader Asian currencies moved within a tight range. The Chinese yuan pair held steady after wild swings this week, although sentiment toward China remained negative as weak PMI data fueled concerns about an economic slowdown.
The Australian dollar pair rose slightly ahead of a , with soft consumer price index data fueling expectations that the central bank will keep interest rates unchanged until at least next year.
But the data for the second quarter is slightly higher.
The South Korean won pair rose 0.2% despite a slightly stronger-than-expected performance for July, while the Singapore dollar pair was flat.
The Indian rupee pair moved little and remained within sight of record highs.
