Asia FX weakens as the dollar recovers amid waning joy from interest rate cuts

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Investing.com – Most Asian currencies fell on Friday as the dollar recovered some of its recent losses after a group of Federal Reserve officials warned that betting on interest rate cuts may be premature.

Although the dollar was still heading for weekly losses, it was well above its lowest level in a month on Thursday. U.S. Treasury yields also rebounded, putting pressure on risk-oriented markets.

Regional factors also weighed on Asian currencies as economic data from China and Japan were disappointing.

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Chinese yuan feeble amid diversified economic trends

The Chinese yuan pair rose 0.1%, returning to six-month highs above 7.22.

Economic readings from the country continued to provide moderate signals of economic recovery. Friday’s data showed they rose more than expected in April.

However, other readings showed China’s growth slowed sharply while China’s contraction accelerated last month.

The Chinese also saw smaller-than-expected growth in April, although they fell from a seven-month high but still remained relatively high.

The readings presented a mixed outlook for Asia’s largest economy. They also emerged after the US imposed higher tariffs on key Chinese industries, raising fears of a renewed trade war between Beijing and Washington.

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

The Singapore dollar pair rose 0.1% after the island nation’s price rose at a slower-than-expected pace in April and also fell sharply from last year.

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The weakening of the Japanese yen deepened after weaker-than-expected gross domestic product data for the first quarter. The pair rose 0.3% and was on the verge of breaking above 156, extending the pointed overnight gains.

The dollar is recovering most of its weekly losses as the Fed downplays interest rate cuts

In Asian trade, the and indexes rose 0.2% each, extending the overnight rebound from one-month lows.

The dollar’s recovery came as several Fed officials, particularly members of the bank’s interest-rate committee, said they needed much more certainty that inflation was falling, beyond some moderation in inflation in April.

According to .

Nevertheless, the dollar was expected to lose about 0.7% this week after slightly weaker-than-expected data for April. The reading, combined with gentle data, strengthened hopes for a reduction in inflation in the coming months.

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