Investing.com– Most Asian currencies rose on Friday as positive economic data from the U.S. and China helped ease recession fears, although higher risk appetite put renewed pressure on the Japanese yen.

The dollar strengthened on better-than-expected jobs data, although any major gains in the U.S. currency were muted by continuing bets on interest rate cuts.

The growing concern about risk in equity markets has also contributed to increased confidence in regional markets.

China’s yuan strengthens as inflation rises

The Chinese yuan strengthened on Friday, with the currency pair down 0.1% after the People’s Bank set a stronger-than-expected midpoint.

The yuan was also boosted by data showing that Chinese inflation rose more than expected in July, while the fall in inflation was slightly less than expected.

Data suggest that recent interest rate cuts in China have helped boost consumer spending and price growth, although lower interest rates do not bode well for the yuan in the longer term.

Traders were also cautious about whether Friday’s readings indicated a trend, given that despite some recovery in July, inflation in China remains on a downward trend.

Japanese yen under pressure as risk sentiment improves

The Japanese yen stabilised on Friday but has fallen sharply in recent sessions on less hawkish signals from the Bank of Japan and as improving sentiment weakened demand for the safe-haven currency.

The pair fell slightly to 147.22 yen, but the currency was trading well above early-week lows of around 141.6 yen.

The change in the yen came after Bank of Japan officials said they would not raise interest rates amid market volatility, softening the central bank’s hawkish stance expressed at a meeting in tardy July.

However, despite this week’s weakness, the yen has continued to gain against the dollar over the past month, especially as global carry trade has begun to retreat.

Dollar stable, CPI data expected

Both prices and currencies stabilised on the Asian stock market after rising slightly overnight.

The better-than-expected data helped fuel more bets that the labor market is not slowing as drastically as last week’s payroll data suggested.

However, despite the positive data, investors largely maintained their expectations for an interest rate cut in September, although they lowered expectations for a cut by 50 basis points, it was reported.

Broader Asian currencies rose as sentiment improved. A pair of rate-sensitive South Korean won fell 0.7%, while a pair of Singapore dollars fell 0.2% in holiday trading.

The Australian dollar rose 0.1%, extending gains after hawkish signals from the Federal Reserve boosted the currency.

The Indian rupee rebounded slightly from record highs after the Reserve Bank of India adopted a slightly hawkish tone and slightly lowered its growth forecast for the current quarter.