© Reuters.
Investing.com – Most Asian currencies moved slightly on Friday, while the dollar flattened recent gains as more stimulus measures in China did little to improve sentiment amid concerns about rising interest rates and a dampening economic outlook.
The dollar has recovered sharply from its lowest levels in 15 months this week as traders turned to safe havens ahead of next week. While the central bank is expected to raise interest rates by 25 basis points, the markets remained uncertain as to whether the bank would signal a.
The bank saw some moderate profit-taking on Friday, falling 0.1% each in Asian trade. But both were set to gain nearly 1% this week.
This saw most Asian units heading for some weekly losses, with investors remaining wary of risk-driven assets ahead of the Fed meeting.
The strengthening of the Chinese yuan after strong reform and stimulus measures in focus
It rose 0.1% on Friday after a much stronger daily midpoint fix by the People’s Bank. The currency recovered from the $7.2 level after being hit by concerns about slowing economic growth in China during the week.
China’s top currency regulator said on Friday the country would do so, after media reports said the country’s largest state-owned banks had intervened in currency markets by selling dollars to support the yuan.
On the stimulus front, the National Development and Reform Commission, China’s largest economic planner, aims to support spending on cars and consumer electronics.
While the move indicates more support for a slowing economic recovery in the country, the increase in liquidity also portends more pressure on the yuan. The broad markets also don’t seem to be thrilled with the new stimulus measures.
The yuan is one of the worst performing Asian currencies this year, falling 4% against the dollar.
Other Asian currencies were muted, falling 0.3%, while trading sideways.
Japanese Yen Steady, CPI Inflation Growing in June
It was flat as data (CPI) showed that inflation held steady during June. The reading showed that Japanese inflation is beginning to recover despite government measures to curb higher prices, and may eventually pressure the Bank of Japan (BOJ) to tighten monetary policy. The reading also remained near a 40-year high.
However, a Reuters poll showed that markets largely expect the Bank of Japan to sit back on its yield curve control policy when it meets next week.
