© Reuters.
Investing.com – Most Asian currencies rose modestly on Friday, recouping some recent losses as markets remained on edge ahead of a key US inflation indicator, while a weaker Japanese yen fueled speculation about government intervention.
Weaker-than-expected Chinese PMI data provided further economic headwinds for Asia, as the region’s largest economy slowed for the third straight month.
It was flat on Friday, but was trading at a seven-month low against the dollar. The currency was also on track for a 2% loss in June.
Concerns about slowing Chinese growth kept most other Asian currencies trading in a narrow range, with gains of 0.2%, while currencies traded sideways.
It rose 0.2% on speculation that the Reserve Bank of Australia will rein in inflation.
Westpac analysts said in a note that they expect an increase of 25 basis points next week.
The Japanese yen is under intervention watch after the recent losses
It traded flat on Friday, after falling briefly below the 145 level for the dollar. The recent weakness in the currency has drawn a slew of verbal warnings from Japanese officials that they will act to ensure the currency’s stability.
Analysts commented on 145 points where the government could intervene. The government last moved in October and November to curb the yen’s weakness, after it fell to a more than 30-year low of over 150.
Friday’s data showed it held steady through June, heralding a similar reading from nationwide inflation data due later in July. But despite the sticky inflation, the Bank of Japan has given no indications that it intends to tighten its ultra-loose policy.
Dollar stability ahead of inflation data in personal consumption expenditures
The broader Asian currencies were muted as the dollar continued to dominate the currency markets amid rising bets that the Federal Reserve will raise interest rates.
The pair moved slightly in Asian trading on Friday, after reaching a two-week high in overnight trading.
Data released Thursday showed that growth grew much more than initially thought in the first quarter, raising bets that the Federal Reserve will have enough room to continue raising interest rates.
This came after Federal Reserve Chairman Jerome Powell reiterated the bank’s plans to raise interest rates at least two more times this year.
Focus now on – the Fed’s preferred inflation measure – due later in the day. The index is expected to hold steady in May compared to the previous month, putting pressure on the Fed to keep interest rates high to curb flat inflation.