Investing.com – Most Asian currencies ranged from flat to low on Thursday as markets awaited further signals on U.S. interest rates from Federal Reserve officials and upcoming inflation data.
The Japanese yen showed some resilience, with the pair halting its recent decline following somewhat hawkish comments from the Bank of Japan. Traders also feared further government intervention in foreign exchange markets.
Asian currencies were broadly muted as the dollar recovered from recent losses this week as a number of Fed officials warned that persistent inflation would likely keep interest rates high for a long time.
Japanese yen pauses losses, USDJPY fluctuates above 155
The Japanese yen pair USDJPY, which inversely reflects the yen’s strength, hovered around mid-155 pips on Thursday, halting a recent streak of losses.
The pause came after Bank of Japan Governor Kazuo Ueda warned that any inflation pressures arising from the yen’s weakness could trigger monetary tightening by the central bank, reversing its stance after saying last month that the the depreciation of the yen had no direct impact on inflation.
Ueda’s comments were enough to stem losses in the yen, which had been weakening even after the Japanese government appeared to intervene in currency markets last week.
However, the March data raised doubts about how much room the Bank of Japan actually had to tighten policy.
Chinese yuan cuts losses amid rising imports
The Chinese yuan pared some intraday gains after data showed the Chinese yuan rose significantly more than expected in April, signaling some strengthening in domestic demand.
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Although the surge in imports exceeded expectations, it caused China to grow less than expected. However, the trade balance rose from a four-month low hit the previous month.
While increased imports usually don’t bode well for currencies, the yuan was buoyed by optimism about a potential economic recovery in China, which supported local consumption.
Dollar stabilizes thanks to Fed speeches; inflation data is now available
Overall, Asian currencies were muted as they stabilized after a strong recovery this week.
The main focus was on new Fed speeches on Thursday and Friday, as well as key data that will be released next week.
Doubts over US interest rates saw most Asian currencies trade sideways on Thursday. The Australian dollar rose less than 0.1%, while the Singapore dollar and South Korean won were unchanged.
The Indian rupee pair remained virtually unchanged but remained within sight of the record highs reached at the end of April.