Asian Currencies Fall as Dollar Steadies
The Dollar Remains Strong
Most Asian currencies fell on Friday, while the dollar steadied from recent losses as hawkish signals from the Federal Reserve and strong U.S. labor data cast more doubts over early U.S. rate cuts.
Stable Trading for Asian Currencies
The Japanese yen and Chinese yuan both moved little in Asian trade, and were set for mild weekly losses, as they fell from three-month highs earlier in the week.
Positive Outlook for the Greenback
But the outlook for the greenback remained upbeat amid more signals that the Fed will keep rates higher for longer.
Fed Comments and Labor Data Impact
Fed’s Waller said on late-Thursday that he needed more evidence that inflation was cooling, before the central bank would consider interest rate cuts. His comments were the latest among a slew of other Fed officials who said that the bank was in no hurry to begin trimming monetary policy.
Waller’s comments came just hours after data showed U.S. jobless claims unexpectedly fell over the past week, signaling continued strength in the labor market, which gives the Fed even less impetus to cut rates early.
Impact on Asian Markets
The prospect of higher for longer U.S. rates bodes poorly for Asian markets, as the gap between risky and low-risk yields narrows. This notion kept most regional currencies trading lower for the week.
Yen’s Performance and Potential Intervention
A market holiday in Japan kept regional trading volumes muted on Friday. But the Japanese yen remained above the 150 level to the dollar, even as Japanese ministers offered more warnings on potential intervention measures.
The outlook for the yen was also somewhat soured by persistent concerns over a slowing Japanese economy, after it unexpectedly entered a recession in the fourth quarter.
Performance of Other Asian Units
Among other Asian units, the Korean won fell slightly amid continued focus on whether Beijing will unlock more stimulus measures to support the economy. The Singapore dollar shed 0.2%, while the Thai baht was flat before key inflation readings due later on Friday.
Indian Rupee’s Performance
The Indian rupee was among the few gainers for the day, rising 0.2% as it extended a rebound from three-month lows. The Indonesian rupiah was flat but appeared to be moving further away from the 83 level. Sentiment towards India was aided by a strong reading on the service sector, released on Thursday.
