Asia FX :2024 weakens as dollar recovers amid waning rate cut cheer

Asia FX weakens as dollar recovers amid waning rate cut cheer

Most Asian currencies retreated on Friday as the dollar recovered a measure of recent losses after a string of Federal Reserve officials warned that bets on interest rate cuts may be premature.

While the greenback was still headed for some weekly losses, it was trading well above a one-month low hit on Thursday. U.S. Treasury yields also rebounded, pressuring risk-driven markets.

Regional factors also weighed on Asian currencies, as economic data from China and Japan underwhelmed.


Chinese yuan weak amid mixed economic prints

The Chinese yuan’s USDCNY pair rose 0.1%, moving back to six-month highs above 7.22.

Economic readings from the country continued to offer middling signals on an economic recovery. Data on Friday showed industrial production grew more than expected in April.

But other readings showed growth in retail sales slowed sharply, while a decline in Chinese house prices accelerated last month.

Chinese fixed asset investment also grew less than expected in April, while unemployment fell from a seven-month high, but still remained relatively high.


The readings presented a mixed outlook for Asia’s biggest economy. They also came after the U.S. imposed higher tariffs on key Chinese industries, sparking fears of a reignited trade war between Beijing and Washington.

Concerns over China weighed on other currencies with trade exposure to the country. The Australian dollar’s AUDUSD pair fell 0.2%, while the South Korean won’s USDKRW pair rose 0.7%.

The Singapore dollar’s USDSGD pair rose 0.1% after the island state’s non-oil exports grew at a slower-than-expected pace in April, and also contracted sharply from last year.

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