The Latest on Asian Currencies: A Recap
Asian currencies moved little in trading on Friday, with the Japanese yen holding steady near two-week highs. Meanwhile, the dollar gained ground as the market awaited key nonfarm payrolls data, leading to increased caution around U.S. interest rates.
Fed Comments Drive Dollar Strength
The greenback received support from hawkish comments made by Federal Reserve officials, including Minneapolis Fed President Neel Kashkari. Kashkari indicated that persistent inflationary pressures could prevent the central bank from cutting interest rates through 2024.
This sentiment, echoed by other Fed officials, contributed to losses in U.S. markets and kept traders cautious about risk-driven assets.
Dollar Rebounds Ahead of Payrolls Data
Amid expectations of the nonfarm payrolls report, the dollar rebounded in Asian trading, with both the EUR/USD and GBP/USD pairs climbing 0.2%. Market focus shifted back to the greenback as inflation and labor market strength became key factors in the Fed’s rate decisions.
As traders anticipate the payrolls data, upcoming U.S. inflation figures are also set to provide insights into future interest rate movements.
Yen Strength and Intervention Concerns
The Japanese yen strengthened, causing the USD/JPY pair to hit a two-week low. Concerns over potential government intervention in currency markets fueled this movement, with Japanese officials warning against extended yen weakness.
While the USD/JPY pair reached a 34-year high last week, recent comments from Bank of Japan officials indicated a leaning towards tightening monetary policy in response to rising inflation.
Market Moves Across Asia
Other Asian currencies saw muted movement ahead of the U.S. payrolls release. The Australian dollar slid 0.3% following disappointing trade data for February, driven by reduced exports to China.
Chinese markets remained closed for the day, but the offshore yuan showed a slight uptick, staying comfortably above the 7.2 level. Additionally, the South Korean won and Singapore dollar pairs both saw modest gains.
The Indian rupee remained stable near record highs ahead of an RBI policy meeting, where rates are expected to be maintained at 6.5%.
