Asia FX Declines ahead of US Jobs Data

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On Friday, most Asian currencies declined as markets were cautious ahead of the labor market data in the US later in the day for the month of February. 

Meanwhile, the Bank of Japan (BOJ) stuck to its dovish stance, which saw the Japanese yen record declines.

Yen falls

There was a 0.4% drop in the yen, as it held close to its lowest levels in 2023, after the Bank of Japan opted to continue with low interest rates. 

The Japanese central bank did not make any changes to its ultra-dovish policy, despite a change in leadership approaching.

The meeting on Friday was the last one under Governor Haruhiko Kuroda and his successor is expected to be Kazuo Ueda. 

The economist will take the position from next month and has indicated that he intends to stick to an accommodative monetary policy in the near-term.

However, analysts predict a pivot to happen by the end of the year.

Currency movements

Data also showed that there was a fall in the producer price inflation in Japan for the second month in a row, which was in accordance with the forecast of the Bank of Japan about inflation easing.

Nonetheless, it is likely to remain muted in the short-term due to the dovish stance of the central bank. There was a decline in broader Asian currencies, with most on course to record weekly losses.

This is due to the fact that markets took a beating over concerns about interest rates in the US. More hints about the monetary policy would be available after the nonfarm payrolls data is disclosed.

There was a 0.2% decline in the Taiwan dollar, South Korean won and the Singapore dollar each.

Dollar and yuan

Overnight trading saw the dollar fall against a basket of currencies, as weekly jobless claims turned out to be higher-than-expected. 

This gave rise to hopes of a cooldown in the labor market. On Friday, the US dollar index and futures remained flat, close to their strongest levels in three months.

On Friday, the Chinese yuan also remained flat, but its weekly losses were around 0.9%, after a series of economic data releases.

Economic recovery in China appears to be staggered, despite the removal of COVID-related restrictions earlier this year.

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