Investing.com– Most Asian currencies fell on Thursday, with the dollar rising from a seven-month low on bargain buying, although investors remained bearish on the U.S. currency on expectations of a rate cut.

The Japanese yen weakened after powerful gains this week, although sentiment towards Japan improved on positive purchasing managers’ index data.

Broader Asian currencies also posted some gains this week amid growing confidence that the Federal Reserve will start cutting interest rates in September. However, faint jobs data released on Wednesday has somewhat unsettled risk sentiment as fears of a U.S. recession have come back into play.

Dollar bounces from 7-month lows; focus on rate cuts and recession

Both currencies rose 0.2% in Asian trade, recovering losses after three days of weighty declines that pushed the dollar to a seven-month low.

The dollar’s ​​weakening came amid growing bets on a September interest rate cut. The results of the Federal Reserve’s July meeting released Wednesday showed a majority of policymakers favoring lower rates.

A piercing downward revision to U.S. payroll data for the year to March 2024 has strengthened the case for lower interest rates. But the revision has also sparked renewed concerns that a slowdown in the labor market signals a U.S. recession, especially since payroll data in recent months has also shown weakness.

We will now turn our attention to our presentation at the Jackson Hole Symposium on Friday, where we will provide more information on the economy.

Japanese Yen Stabilizes as PMI Points to Services Growth

The Japanese yen fell slightly on Thursday but held on to most of its gains this week as economic data fueled bets on more rate hikes by the Bank of Japan. The pair hovered around 145 yen.

Purchasing Managers’ Index data showed Japan’s economy expanded steadily for a second straight month, helping to offset a decline in .

The strength in the services sector was also fueled by improved domestic demand, as private consumption rose amid rising wages. That in turn provided a brighter outlook for inflation, which could spur more rate hikes by the BOJ.

A Japanese-language publication is due out on Friday that is likely to provide more information on the economy.

Broader Asian sector currencies fell as markets weighed the prospect of a US recession against the backdrop of lower interest rates.

The Chinese yuan was unchanged, while the South Korean won rose 0.2% after it kept interest rates on hold and warned of a possible cut later in the year.

The Australian dollar fell 0.1%, slowing after a recent rally, while the Singapore dollar rose 0.1%.

The Indian rupee rose slightly and remained close to a record high.