© Reuters.
Investing.com – Most Asian currencies rose slightly on Friday, recouping some of the week’s losses as markets became precarious about the path of US monetary policy ahead of key nonfarm payrolls data due later in the day.
Regional units saw some support after the dollar fell on Thursday, as disappointing and mixed labor market readings from the US had traders wondering how far the Fed should continue to raise interest rates.
It rose 0.1%, off the six-month low it hit earlier this week. The currency has been supported by a stronger daily midpoint fix from the People’s Bank of China.
A report on Thursday also showed some resilience in China’s manufacturing sector, sparking some optimism about an eventual economic recovery this year, although the near-term outlook remains bleak.
Optimism about China also extended to the Middle East, which rose 0.4%, tracking gains in commodity prices.
The situation was flat on Friday as Bank of Japan Governor Kazuo Ueda said the bank had no specific timeframe for when inflation would reach its annual 2% target, while reiterating that the BoJ would maintain its hawkish policy for now. .
However, the yen was sitting on solid gains overnight, recovering from a six-month low hit earlier this week.
It rose 0.2%, as data showed that the country’s economy grew in the first quarter. It also remained constant in May of the previous month.
Broader Asian currencies advanced, while the dollar held steady in Asian trade after heavy losses overnight.
The pair moved less than 0.1% in either direction, after falling nearly 0.7% each on Thursday.
Data showed a contraction for the seventh consecutive month in May, while labor market data showed that wages were stagnant, even as employment continued to expand this year.
The readings raised bets for the Fed to pause in June, with the indication that there is approximately a 74% chance of a pause. Friday’s reading, however, is likely to provide a clearer view of how the Fed is moving.
While the reading in May is expected to have softened from the previous month, payrolls also beat expectations for 12 of the past 13 months. A strong labor market gives the Fed more momentum and room to maintain higher rates – a scenario that does not bode well for Asian currencies.