Investing.com– Most Asian currencies were trading in a narrow range on Thursday after posting powerful overnight gains as U.S. inflation data came in weaker than expected and the dollar neared a seven-month low.

The sentiment towards regional markets was also supported by positive economic data from Japan, Australia and to some extent from China.

In Asian trading, the index was holding around the mid-102 level, remaining close to a seven-month low.

Wednesday’s data was slightly lower than expected, boosting bets on a rate cut in September. However, investors became more biased toward a 25 basis point cut than a 50 basis point cut as CPI data still posted a month-over-month enhance.

This restricted gains for most Asian currencies, although broader risk-on markets, particularly equities, posted acute gains.

Japanese Yen Stable, Q2 GDP Above Expectations

The Japanese yen steadied on Thursday after a muted performance in overnight trading as improved risk sentiment dampened demand for the safe-haven currency. The pair hovered around 147.25 yen.

Data showed Japan’s economy grew more than expected in the second quarter, helped by a rebound led by rising wages in Japan.

The reading is in line with the Bank of Japan’s forecast that rising wages will boost the Japanese economy, giving the central bank more room to raise interest rates this year.

This scenario heralds further strengthening of the yen, which already recorded a significant enhance against the dollar last month.

China’s yuan weakens amid mixed economic signals

The Chinese yuan weakened on Thursday, with the currency pair rising 0.2% as a series of readings painted a mixed picture for the Chinese economy.

China’s economy grew more than expected, raising some confidence that consumer spending and inflation will improve.

However, growth was smaller than expected, as was the case in China. Growth unexpectedly came in at 4.2%.

The readings showed that while some of Beijing’s policy measures supported consumer spending, the overall economy remained under pressure.

Australian dollar rises on powerful jobs data

The Australian dollar was the best performer in Asia, with the currency rising 0.5% after data showed above-average growth in July for the second month in a row.

The reading indicated Australia’s jobs market is warm despite a generally frail economy, potentially fuelling inflation and giving the Reserve Bank of Australia more room to keep interest rates high.

Traders had speculated the RBA could even raise interest rates to cold sentiment in the jobs sector, after Governor Michele Bullock warned last week that the central bank was open to raising rates further to combat inflation.

Broader Asian sector currencies were less lively due to bank holidays in South Korea and India.