Investing.com — Most Asian currencies moved in a flat-to-low range on Friday, with the Chinese yuan seeing wild swings amid suspected intervention from the People’s Bank, while the dollar remained steadier ahead of key inflation data.
Weak risk appetite kept traders off most regional currencies this week, while the Japanese yen saw extended buying as it benefited from safe-haven demand, while a declining carry trade also benefited the currency. The yen performed by far the best among its Asian peers this week.
Commodity-linked currencies, especially those with exposure to China, saw some relief on Friday, with the Australian and New Zealand dollars gaining slightly. But the two posted steep losses this week.
Dollar stable after strong GDP; inflation, Fed in focus
The and both held steady on Friday after seeing some resilience on stronger-than-expected second-quarter data.
The data boosted hopes that the US economy was heading for a soft landing, where growth will remain stable while inflation declines.
The focus is now squarely on numbers, which are the Federal Reserve’s favorite inflation gauge. The reading is due later on Friday and is expected to show that inflation eased further in June.
PCE data also comes just days ahead of a , where the central bank is widely expected to keep interest rates unchanged. But any signals of rate cuts will be closely watched, with markets keeping expectations for a September rate cut intact.
Chinese Yuan Records Wild Swings After Suspected Intervention
The Chinese yuan weakened on Friday and retreated after a suspected intervention by the Chinese government saw the currency rise sharply against the dollar on Thursday.
The pair fell sharply from its highest level in almost eight months on Thursday, with the excessive decline sparking speculation about government intervention. The currency has faced increasing selling pressure following a series of surprise rate cuts by the PBOC this week.
Doubts about a slowing economic recovery also weighed on the yuan.
The Japanese yen is performing better, BOJ expected
The Japanese yen was among the best performers this week, continuing a strong run after a suspected intervention by Tokyo earlier in July boosted the currency.
The pair fell 2.4% this week, the biggest weekly drop since late April.
However, the yen’s advance was somewhat halted by , which showed that inflation remained largely subdued in July.
The soft inflation data came just days ahead of , with analysts divided over whether the central bank will have enough room to raise rates by 10 basis points.
Broader Asian currencies posted particularly steep losses against the dollar this week as risk appetite declined. The Australian dollar pair and the New Zealand dollar pair both fell by almost 2% this week.
The Indian rupee pair held steady after apparent Reserve Bank intervention pulled the pair away from record highs on Thursday.
The South Korean won pair rose 0.3%, while the Singapore dollar pair was flat after the Monetary Authority of Singapore left monetary policy unchanged.
