Investing.com-- Most Asian currencies moved in a flat-to-low range on Friday, while the dollar remained near four-month lows ahead of key nonfarm payrolls data, which is set to provide more cues on interest rates.
Regional currencies saw some relief this week as U.S. President Donald Trump made concessions for Canada and Mexico from his recently imposed 25% tariffs. But Trump’s 20% tariffs on China remained, drawing ire and retaliation from Beijing, while also marking an escalation in a brewing global trade war.
The Japanese yen was an outperformer among its peers, reaching its strongest level in five months on sustained safe haven demand. Signs of strength in the Japanese economy and hawkish signals from the Bank of Japan also boosted the yen.
The Chinese yuan also clocked some gains this week, boosted by more support from the People’s Bank, while Beijing’s promises of more stimulus also aided the currency. But this was offset by mixed trade data on Friday, which reflected some of the impact of Trump’s tariffs.
Dollar near 4-mth low with nonfarm payrolls in focus
The dollar index and dollar index futures both fell slightly in Asian trade, remaining close to a four-month low hit earlier this week.
The dollar was battered by growing fears of a U.S. economic slowdown, with uncertainty over the impact of Trump’s policies adding to pressure on the greenback.
Atlanta Federal Reserve President Raphael Bostic said on Thursday that Trump’s policies were clouding the U.S. economy’s outlook, and also warned that his tariffs could underpin inflation. The Fed is widely expected to keep rates unchanged as it seeks more clarity on the economy.
Nonfarm payrolls data for February, due later on Friday, is expected to provide more cues on the economy. While the labor market has so far remained strong, any signs of cooling in the sector could further undermine sentiment towards the U.S. economy.
Chinese yuan muted after mixed trade data
The Chinese yuan moved little on Friday, with the USD/CNY pair hovering around 7.2488 yuan. The pair was set to lose 0.5% this week.
China’s exports grew at a much slower-than-expected pace in the January-February period, while imports unexpectedly tumbled. But China’s trade balance grew more than expected.
Still, the weak exports reflected some headwinds from Trump’s trade tariffs, which took effect from early-February. Trump increased his China tariffs to 20% this week.
Beijing had retaliated with a slew of measures, which also likely factored into the weaker import figure. But China’s trade surplus remained strong.
Among broader Asian currencies, the Japanese yen’s USD/JPY pair fell 0.3% and was close to its lowest level since early-October. The yen benefited greatly from increased safe haven demand, while hawkish signals from the BOJ saw traders positioning for more interest rate hikes this year.
The Australian dollar’s AUD/USD pair fell 0.3%, reversing course after a strong rebound in the past week. The Singapore dollar’s USD/SGD pair rose 0.1%, while the South Korean won’s USD/KRW pair fell 0.1%.
The Indian rupee’s USD/INR pair hovered above 87 rupees, as it continued to tread water below recent record highs.