©Reuters.
Investing.com– Most Asian currencies fell on Friday as the dollar steadied after recent losses, as hawkish signals from the Federal Reserve and strong U.S. jobs data cast increasing doubt on early U.S. rate cuts .
Both were little movers in Asian trading and were expected to have moderate weekly losses, having fallen from three-month highs earlier in the week.
But the outlook for the greenback remained optimistic amid further signs that the Fed will keep rates higher for a longer period.
The Fed’s hawkish comments and positive jobs data further dent expectations of an early rate cut
said Thursday night that it needed more evidence of cooling inflation before the central bank would consider interest rate cuts.
His comments were the latest among a number of other Fed officials who said the bank was in no rush to start tapering monetary policy. The Fed meeting at the end of January also reiterated this message earlier in the week.
Waller’s comments came just hours after data showed an unexpected decline over the past week, signaling continued strength in the labor market, which gives the Fed even less impetus to cut rates early.
The prospect of higher long-term US rates does not bode well for Asian markets, as the gap between risky and low-risk yields narrows. This concept kept most regional currencies trading lower during the week.
This showed that traders are further reducing expectations for the Fed’s May and June rate cuts.
Yen above 150, under observation
A market holiday in Japan kept regional trading volumes low on Friday. But the dollar remained above the 150 level, even as Japanese ministers issued further warnings of potential intervention measures.
The outlook for the yen has been soured somewhat by lingering concerns about Japan’s slowing economy after the country unexpectedly entered recession in the fourth quarter.
Levels above 150 yen have attracted record intervention from the Japanese government in 2022, a trend that could repeat itself again if currency weakness persists.
Among other Asian units, the value fell slightly amid continued focus on whether Beijing will unleash further stimulus measures to support the economy.
The decline was 0.2%, while the rate was flat ahead of key inflation data due later on Friday.
The index was among the few gainers on the day, rising 0.2%, extending its rebound from three-month lows.
The level was flat but seemed to move further away from the 83 level. Sentiment towards India was supported by positive data released on the services sector on Thursday.