Asia FX muted, yen steadies while dollar rises before nonfarm payrolls By Investing.com

Investing.com– Most Asian currencies moved little on Friday with the Japanese yen steadying near two-week highs, while the dollar rose as anticipation of key nonfarm payrolls data spurred more caution over U.S. interest rates.

Hawkish comments from Federal Reserve officials also supported the greenback, after Minneapolis Fed President Neel Kashkari said that sticky inflation could see the central bank not cut interest rates at all in 2024. 

His comments, which came after a string of similar signals from other Fed officials, sparked steep losses on Wall Street and kept traders largely wary of risk-driven assets.

Dollar recovers as nonfarm payrolls loom

The and rose 0.2% each in Asian trade on Friday, recovering from steep losses earlier in the week as anticipation of data saw traders turn back towards the greenback.

Inflation and labor market strength are the Fed’s two biggest considerations for cutting interest rates this year. But inflation has turned sticky in recent months, while payrolls data has also consistently topped market expectations. 

Beyond the payrolls data, U.S. inflation data is also on tap next week, and is likely to provide more cues on interest rates.

USDJPY near two-week low as intervention threats buoy yen 

The Japanese yen firmed on Friday, with the pair hitting a two-week low amid persistent concerns over government intervention in currency markets.

Several top Japanese officials warned that sustained weakness in the yen could see the government intervene in currency markets- an event that is bound to spark strong near-term gains in the yen.

The USDJPY pair had risen to its highest level in 34 years last week, amid a largely dovish outlook for the Bank of Japan despite its first rate hike in 17 years. 

But recent comments from BOJ officials also showed that they expected to further tighten monetary policy this year amid increasing inflation. 

Broader Asian currencies moved in a flat-to-low range, as sentiment remained on edge before the U.S. payrolls print.

The Australian dollar’s pair sank 0.3% after data showed a bigger-than-expected decline in the country’s in February. The drop was driven chiefly by shrinking iron ore exports to China. 

Chinese markets were closed for the day. The yuan’s offshore pair- – rose slightly and remained well above the 7.2 level.

The South Korean won weakened, with the pair rising 0.2%, while the Singapore dollar’s pair also rose 0.1%.

The Indian rupee’s pair was flat and close to record highs ahead of a meeting later in the day. The RBI is widely expected to keep policy repo rates at 6.5%.