Investing.com – Most Asian currencies fell on Friday, with the Chinese yuan returning to a six-month low after disappointing business activity data, while the dollar steadied ahead of key inflation data.
Regional currencies also remained under pressure amid persistent concerns over high, long-term US interest rates as hawkish comments from Federal Reserve officials continued to pour in.
But they saw some relief on Thursday as the dollar fell from more than two-week highs following softer gross domestic product data.
Dollar stabilizes after one-day losses, PCE test expected
The index rose 0.1% in Asian trade, stabilizing from a one-day loss after revised first-quarter data showed the economy grew less than initially expected.
The data signaled a cooling in the US economy, raising some hopes that the Fed could eventually soften its hawkish stance to promote economic growth.
But concerns about persistent inflation and high interest rates remained the focus, with data – the Fed’s preferred inflation gauge – due later on Friday.
Data is expected to show inflation eased slightly in April but remained well above the Fed’s annual target of 2%.
Chinese Yuan weakens as PMIs disappoint; more stimuli in focus
The Chinese yuan rose 0.1%, returning to six-month highs reached earlier this week.
Purchasing Managers’ Index data showed China’s business activity worsened in May after improving slightly over the past two months. unexpectedly fell back into contraction territory, although growing at a slower-than-expected pace.
While the data presented new headwinds for the Chinese economy, it also raised bets that Beijing will increase stimulus spending to support growth. But the spending, which will likely lead to looser monetary conditions, likely doesn’t bode well for the yuan.
Other Chinese-exposed currencies moved in a flat to minimal range. The Australian dollar rose marginally, while the South Korean won rose 0.5%.
The Singapore dollar rose almost 0.1%.
Among other Asian currencies, the Japanese yen was little changed on Friday after falling sharply in overnight trade, following some dollar weakness.
showed that inflation in Japan’s capital rose as expected in May, although it was still relatively weak. Mild inflation bodes bad news for the yen as it gives the Bank of Japan less incentive to start raising interest rates.
The Indian rupee pair remained close to recent record highs above Rs 83 ahead of the 2024 general election results on June 4.