Investing.com – Most Asian currencies fell on Friday as the dollar recovered some of its recent losses after several Federal Reserve officials warned that bets on interest rate cuts could be premature.
While the dollar was still poised for some weekly losses, it traded well above a one-month low on Thursday. US Treasury yields also rose, weighing on risk-minded markets.
Regional factors also weighed on Asian currencies as economic data from China and Japan turned out to be disappointing.
Chinese yuan weakens amid mixed economic data
The Chinese yuan rose 0.1%, returning to a six-month high above 7.22.
The country’s economic indicators continued to provide average signals of economic recovery. Data on Friday showed growth in April was larger than expected.
But other indicators showed growth in China slowed sharply, while China’s contraction accelerated last month.
The Chinese index also rose less than expected in April, although it fell from a seven-month high, but still remained relatively high.
The data presented a mixed outlook for Asia’s largest economy. They also come as the US imposed higher tariffs on key Chinese industries, raising fears of a renewed trade war between Beijing and Washington.
Concerns about China have put pressure on other currencies linked to trade with the country. The Australian dollar fell 0.2%, while the South Korean won rose 0.7%.
The Singapore dollar rose 0.1% after the island nation’s economy grew slower than expected in April and contracted sharply from a year ago.
remove advertising
.
The Japanese yen’s weakness intensified following the release of weaker-than-expected first-quarter gross domestic product data. The pair was up 0.3% and was close to breaking above 156, continuing its sharp rise overnight.
Dollar pares most of week’s losses as Fed downplays rate cuts
During Asian trading, indices rose 0.2%, continuing their overnight rebound from monthly lows.
The dollar’s recovery came as several Fed officials, particularly members of the bank’s rate-setting committee, said they needed much more confidence that inflation was falling, beyond a slight slowdown in inflation in April.
That led traders to cut bets on a September rate cut, although only slightly, according to .
However, the dollar will lose about 0.7% this week following the release of softer-than-expected April data. The data, coupled with weak data, has boosted hopes that inflation will ease in the coming months.