Investing.com — Most Asian currencies retreated Friday as the dollar recovered a benchmark from recent losses after a series of Federal Reserve officials warned that bets on rate cuts could be premature.
While still on track for some weekly losses, the dollar was trading well above one-month lows on Thursday. US government bond yields also recovered, putting pressure on risk-driven markets.
Regional factors also weighed on the Asian currency, as economic data from China and Japan disappointed.
Chinese yuan weak despite mixed economic developments
The Chinese yuan pair rose 0.1%, returning to a six-month high above 7.22.
The country’s economic data continued to give mediocre signals about an economic recovery. Data on Friday showed growth in April was more than expected.
But other data showed growth slowed sharply as the Chinese economy’s decline accelerated last month.
China also grew less than expected in April, although down from a seven-month high but still remaining relatively high.
The figures gave a mixed outlook for Asia’s largest economy. They also came after the US imposed higher tariffs on key Chinese industries, raising fears of a renewed trade war between Beijing and Washington.
Concerns about China weighed on other currencies with trading exposure to the country. The Australian dollar pair fell 0.2%, while the South Korean won pair rose 0.7%.
The Singapore dollar pair rose 0.1% after the island nation grew slower than expected in April and also shrank sharply from last year.
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Japanese yen weakness increased after weaker-than-expected first-quarter gross domestic product data. The pair rose 0.3% and was close to breaking above 156, delivering sharp gains.
The dollar is paring most of its weekly losses as the Fed plays down interest rate cuts
The and rose 0.2% each in Asian trading, extending a recovery from one-month lows.
The dollar’s recovery came after several Fed officials, particularly members of the bank’s rate-setting committee, said they needed much more confidence that inflation would fall barring any easing of inflation in April.
This has caused traders to scale back their bets on a September rate cut, albeit slightly, according to the .
Still, the dollar is expected to lose about 0.7% this week after some softer-than-expected April data. The outcome, combined with soft data, boosted hopes that inflation will cool in the coming months.
