Investing.com – Most Asian currencies were little changed on Friday as the dollar steadied after an overnight decline, with focus on key U.S. inflation data due next week that is likely to provide more interest rate signals. rates.
The Chinese yuan fell, as did currencies linked to trade with China, after multiple reports suggested the US was preparing new trade tariffs on Beijing.
Regional currencies received little support from the dollar’s overnight decline as fresh signs of a cooling labor market increased bets that the Federal Reserve will cut rates in September.
But the dollar steadied in Asian trade, weighing on regional currencies as uncertainty ahead of key U.S. inflation data next week kept traders leaning heavily toward the greenback.
Chinese Yuan weakens, USDCNY rises amid tariff reports
The Chinese yuan rose 0.1% as multiple reports suggested US President Joe Biden was considering new sanctions on some Chinese industries such as electric vehicles and batteries.
While the economic impact of the tariffs was unclear, such measures could trigger retaliatory measures from China, further fraying ties between the world’s two largest economies.
Other currencies linked to trade with China followed suit. The Australian dollar fell 0.2%, while the Singapore dollar and South Korean won lost 0.1% and 0.3%, respectively.
Japanese yen remains fragile, USDJPY approaches 156
Weakness in the Japanese yen continued this week as the pair recouped most of its losses incurred after the government appeared to intervene in currency markets last week.
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USDJPY rose 0.2% to 155.73 yen, trading well above the low of 152 hit earlier in May. Traders now viewed the 160 yen level as the new limit for Japanese government intervention.
Household spending data for March released earlier Friday showed some resilience, a trend that could potentially support inflation expectations in Japan.
Dollar stabilizes, set for weekly growth ahead of inflation data
Rates also rose slightly in Asian trade, partially recouping losses incurred overnight. But the dollar was still trading up about 0.2% for the week.
The dollar fell on Thursday after data showed a larger-than-expected weekly gain, fueling expectations of a cooling U.S. labor market.
That has fueled some expectations that the Fed will begin cutting interest rates by September.
But persistent inflation remains a key point of contention for the Fed, and multiple officials have warned about it this week.
Their comments put upcoming data due out next week into focus for more information on interest rates.