Investing.com — Most Asian currencies were little moved on Friday as markets sought more clues about a US rate hike, but the Chinese yuan and Japanese yen were helped by speculation over government intervention in the currency market. rice field.
Stronger-than-expected data on Thursday spurred sharp losses in Asian currencies, while the dollar strengthened on rising expectations that the US Federal Reserve will continue to raise interest rates in the coming months.
In Asian trade, and fell about 0.1% each, but were still expected to rise slightly during the week.
By contrast, most Asian currencies are expected to lose in the week on hopes that the gap between risky and low-risk yields will narrow in the coming months.
The currency fell 0.7%, one of the worst performances of the week, as a clear signal from the Reserve Bank about a pause in the rate hike cycle made the currency less attractive.
Chinese Yuan, Japanese Yen Rise in Intervention Negotiations
Both countries edged higher on Friday, fueled by persistent speculation that the Chinese and Japanese governments will intervene in the currency markets to prevent their respective currencies from depreciating.
A series of strong median corrections by the People’s Bank of China also boosted the yuan, which stabilized despite a series of weak Chinese economic data.
The Chinese government last week intervened in the currency market for the first time in eight months to stem the recent depreciation of the yuan as the country’s economic outlook deteriorates. Traders have been eyeing further such moves from the Chinese government, given that the yuan is trading well below its psychologically important seven levels.
The Japanese yen saw no direct intervention, but fell from the key 145 level against the dollar amid repeated verbal warnings from Japanese officials about betting against the yen.
But the outlook for the yen looked bleak, especially after the Bank of Japan reiterated its plans to maintain its accommodative policy.
Nonfarm payrolls in focus, interest rate hike expectations rise
Currencies across Asia were little moved as markets slumped ahead of major US currencies due later on Friday. Both currencies are set to end the week unchanged, up 0.2%, up 0.3%.
Thursday’s jobs report bolstered market expectations for a late July Fed rate hike, suggesting a near 92% chance of a 25 basis point rate hike.
Most Asian central banks have either suspended or ended their rate hike cycle, and rising US interest rates could put more pressure on local currencies in the coming months.