Dollar Steady, Asian Currencies Muted Ahead of Nonfarm Payrolls Release

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Most Asian currencies saw little movement on Friday, while the U.S. dollar held firm ahead of key nonfarm payrolls data, which could offer further insight into interest rate trends and economic conditions.

Investor sentiment remained cautious due to escalating trade tensions between the U.S. and China earlier in the week. Markets were closely monitoring potential discussions between U.S. President Donald Trump and Chinese President Xi Jinping.

The Chinese yuan stayed weak, with the USD/CNY pair hovering near 7.3 as onshore markets resumed trading after the Lunar New Year holiday. Meanwhile, the Japanese yen’s recent rally—driven by expectations of further rate hikes by the Bank of Japan—appeared to be losing momentum, though the USD/JPY pair remained on track for its strongest weekly performance since November.

U.S. Dollar Stable as Markets Brace for Payrolls Report

Both the dollar index and dollar index futures steadied during Asian trading hours, despite nursing weekly losses amid mixed signals from Trump regarding trade tariffs.

Market attention was firmly on January's nonfarm payrolls data, scheduled for release later in the day, as traders anticipated strong job numbers reflecting the resilience of the U.S. labor market. However, some analysts cautioned that disruptions from California wildfires earlier in the year could impact the data.

A robust labor market would provide the Federal Reserve with more justification to maintain its current interest rate stance—a factor that could pressure Asian markets. The Fed has indicated no immediate plans to cut rates due to persistent inflation concerns and uncertainty surrounding Trump’s economic policies.

Japanese Yen Rides BOJ Rate Hike Speculation to Weekly Gains

The yen emerged as one of Asia’s top-performing currencies this week, with the USD/JPY pair set for a 2.3% drop—its sharpest weekly decline since November.

Investor expectations for additional rate hikes from the Bank of Japan strengthened after positive wage and household spending data, along with hawkish remarks from BOJ policymakers. The central bank is projected to raise interest rates by at least 50 basis points, potentially reaching 1% by the end of 2025.

Broader Asian Currencies Muted

Elsewhere, Asian currencies saw limited movement. The Australian dollar (AUD/USD) extended its recovery from a near five-year low recorded in January.

Meanwhile, the Indian rupee (USD/INR) hovered near record lows amid speculation of a possible interest rate cut by the Reserve Bank of India.

The Singapore dollar (USD/SGD) and the South Korean won (USD/KRW) both edged up 0.1%.

 

 

 

 

Paraphrasing text from "Investing.com" all rights reserved by the original author.