Investing.com – Most Asian currencies moved little on Thursday as traders remained largely biased towards the dollar in anticipation of more major US economic signals.
The focus was also on possible government intervention in the Japanese yen, which broke above levels that had prompted government intervention in May.
Sentiment towards Asian markets was weighed down by uncertainty over interest rates in the US, while concerns over China, following weak economic data, also weighed on markets.
Crude oil prices were slightly lower in Asian trading, but remained near the nearly two-month highs hit on Wednesday. The focus this week was squarely on the data — the Federal Reserve’s preferred measure of inflation — as well as the first presidential debate, which is scheduled for later Thursday.
The Japanese yen is weak, and USD/JPY is above the intervention threshold
The Japanese yen rose slightly on Thursday, with the pair falling by 0.2%. The yen’s strength was partly driven by stronger-than-expected data for May.
But the pair crossed the 160 yen level in overnight trading, a level that traders viewed as the threshold for further government intervention.
USD/JPY’s break above 160 in May led to severe levels of intervention in currency markets, with the government selling large amounts of dollars to buy the yen and support the currency.
Japanese officials continued to warn this week that they would respond to any “excessive” moves in currency markets. But it was not yet clear when and how they planned to intervene.
Chinese Yuan Fragile, USD/CNY at 7-Month High
The Chinese yuan pair hovered at a seven-month high on Thursday, following the seventh consecutive weak midpoint reform by the People’s Bank of China.
The yuan has faced increasing selling pressure in recent weeks, especially amid fears of a trade war with the West, after the European Union imposed tariffs on imports of Chinese electric cars.
Sentiment towards China deteriorated further after data showed the country’s economic growth contracted in May.
Broader Asian currencies remained rangebound. The Australian dollar rose 0.1% after rising sharply on Wednesday as higher-than-expected inflation readings raised expectations of a rate hike.
The South Korean won pair fell by 0.2% after rising sharply this week, while the Singapore dollar pair fell by 0.1%.
The Indian rupee pair stabilized after approaching record highs this week.