Investing.com– Most Asian currencies fell on Friday, with the Chinese yuan returning to six-month lows after disappointing business activity readings, while the dollar strengthened ahead of key inflation data.

Regional currencies also remained under pressure on persistent concerns over longer-term high interest rates in the US, amid incoming hawkish comments from Federal Reserve officials.

But there was some relief on Thursday as the dollar fell from more than two-week highs following a weaker gross domestic product reading.

The dollar is stabilizing after overnight losses, the PCE test awaits us

Asian trade rose 0.1%, stabilizing from overnight losses, after a revised reading for the first quarter showed economic growth was weaker than initially expected.

The reading signaled a cooling in the U.S. economy, raising some hopes that the Fed may eventually soften its hawkish stance to boost economic growth.

But concerns about persistent inflation and high interest rates remained in the spotlight, and the data – the Fed’s preferred measure of inflation – will be released later on Friday.

The reading is expected to show that inflation fell slightly in April but remained well above the Fed’s annual target of 2%.

Chinese Yuan Wears After Disappointing PMIs; more stimuli in focus

The Chinese yuan pair rose 0.1%, returning to six-month highs seen earlier in the week.

Purchasing Managers’ Index data showed business activity in China deteriorated in May after improving somewhat in the past two months. unexpectedly fell back into failing territory, although it grew at a slower than expected pace.

While the readings showed that China’s economy was back in trouble, they also fueled hopes that Beijing would spend more to stimulate economic growth. However, the spending – which will likely mean looser monetary conditions – probably bodes ill for the yuan.

Other currencies exposed to China traded in a flat to low range. The Australian dollar pair rose slightly, while the South Korean won pair rose 0.5%.

The Singapore dollar pair rose almost 0.1%.

Among other Asian currencies, the Japanese yen pair was little changed on Friday after falling sharply in overnight trade, tracking some dollar weakness.

showed that inflation in the Japanese capital rose in May as expected, although it remained relatively low. Soft inflation bodes ill for the yen as it gives the Bank of Japan less impetus to start raising interest rates.

The Indian rupee pair remained near recent record highs above Rs 83 ahead of the announcement of the 2024 general election results on June 4.