Investing.com – Most Asian currencies were little changed on Friday, with the Japanese yen steadying near a two-week high while the dollar rose as expectations for key non-farm payrolls data increased caution over U.S. interest rates.
Hawkish comments from Federal Reserve officials also supported the dollar after Minneapolis Fed President Neel Kashkari said the central bank would not cut interest rates at all in 2024 due to persistent inflation.
His comments, which came after a series of similar signals from other Fed officials, triggered sharp losses on Wall Street and left traders largely wary of risk-based assets.
Dollar recovers amid forecasts for non-farm payrolls
Yi rose 0.2% in Asian trading on Friday, recovering from sharp losses earlier in the week as traders pivoted back to the dollar ahead of the data.
Inflation and the strength of the labor market are the Fed’s two main considerations in cutting interest rates this year. But inflation has become resilient in recent months, and wages data have also consistently outperformed market expectations.
In addition to payroll data, US inflation data will be released next week, which will likely provide more insight into interest rates.
USDJPY close to two-week low as intervention threats support yen
The Japanese yen strengthened on Friday, with the pair hitting a two-week low amid ongoing concerns about government intervention in currency markets.
Several senior Japanese officials warned that the yen’s persistent weakness could lead to government intervention in foreign exchange markets, an event that is sure to lead to a strong near-term rise in the yen.
Last week, USDJPY rose to its highest level in 34 years amid a generally dovish outlook from the Bank of Japan, despite its first rate hike in 17 years.
But recent comments from Bank of Japan officials also showed they expect monetary policy to tighten further this year as inflation rises.
Asian currencies were broadly moving in a flat-to-low range as sentiment remained on edge ahead of US jobs data.
The Australian dollar fell 0.3% after data showed a larger-than-expected decline in the country in February. The decline was mainly due to a decline in iron ore exports to China.
Chinese markets were closed that day. The offshore yuan rose slightly and remained well above the 7.2 level.
The South Korean won weakened, with the pair rising 0.2%, while the Singapore dollar also rose 0.1%.
The Indian rupee pair was trading flat and close to record highs ahead of the meeting later in the day. The RBI is expected to keep the repo rate at 6.5%.