Most Asian currencies were steady on Thursday amid concerns over tougher U.S. trade restrictions on China, while the Japanese yen held steady after rising sharply this week amid suspected interference.
Regional currencies have gained in recent sessions amid growing optimism that the Federal Reserve will cut interest rates, which also kept the dollar at its lowest level in about four months.
Gold rose slightly in Asian trading, after falling this week as traders priced in a greater chance that the Federal Reserve will cut interest rates by at least 25 basis points in September.
Japanese Yen Steady After Suspected Intervention
The Japanese yen retreated slightly on Thursday after rising sharply in recent sessions. The pair rose 0.1% to 156.31 yen after falling to a low of 155.38 yen earlier.
The sharp rise in the yen, which has seen the USD/JPY pair fall from around 162 yen over the past week, has sparked growing speculation that the Japanese government has once again intervened in currency markets.
Although the yen got some support from the increasing chances of a U.S. interest rate cut, it also had to deal with weak domestic economic data, which limited any scope for the Bank of Japan to tighten monetary policy.
This has led traders to suspect that the recent rally in the currency’s value has been driven primarily by government intervention. The Bank of Japan data shows that Tokyo spent more than $1 billion intervening in the markets last week.
Chinese Yuan Falls as Trade Concerns Grow
The Chinese yuan was steady on Thursday, with the pair holding below eight-month highs.
Sentiment toward China soured after a Bloomberg report said the United States is considering tougher restrictions on China’s technology and chip industries — a move that could anger Beijing and spark a renewed trade war between the world’s largest economies.
The report comes as the yuan is also facing concerns about a slowdown in China’s economic recovery, especially after second-quarter GDP data indicated a slowdown in economic growth.
Broader Asian currencies moved in a narrow range, with risk appetite dampened by concerns over China. Comments by Republican presidential candidate Donald Trump that Taiwan should pay the United States for defense supplies also weighed on sentiment.
The Australian dollar was an outlier, rising 0.1% after data showed the country’s GDP growth rate rose 0.1%, raising the chances of an interest rate hike by the Federal Reserve.
The South Korean won rose 0.2%, while the Singapore dollar remained flat.
The Indian Rupee pair approached a record high, as the currency saw little relief despite growing optimism about the Indian economy.