Investing.com– Most Asian currencies traded in a narrow range on Friday as rising risk aversion in global financial markets sent funds into safe-haven dollars, while markets awaited key nonfarm payrolls data for further guidance.

The Japanese yen, however, remained steady after a hawkish Bank of Japan sparked a rally in the currency this week, sending it to its strongest levels since slow March. The currency also saw some safe-haven bids as global carry trade continued to unravel.

While global stock markets posted ponderous losses on fears of a slowdown in economic growth, losses in currency markets were circumscribed by the prospect of US interest rate cuts in the coming months. This notion also circumscribed the dollar’s strength.

Yen stable, USDJPY tests 148 on hawkish BOJ

The Japanese yen stabilized after a powerful rally on Friday, with the pair hovering around 149.50 yen. The pair fell to 148.88 yen earlier in the day.

The yen rose this week after the Bank of Japan said it could hike rates further in 2024, citing improving trends in the Japanese economy.

In Japan, data released on Friday showed the change in the total amount of yen in circulation rose more than expected in July, heralding a rise in inflation in the coming months.

The Bank of Japan said inflation is likely to rise as wages rise in the country, indicating a more hawkish stance from the central bank this year.

Dollar recovers some losses, nonfarm payrolls in the spotlight

Asian trade stabilised after a rebound in overnight trading as the dollar benefited from demand for safe-haven assets.

The dollar saw some declines earlier this week after the Federal Reserve signaled a possible interest rate cut in September.

Weak economic data raised the likelihood of an interest rate cut in September, as data showed an above-average reduction in manufacturing activity in June.

Attention now turns to upcoming data expected to provide more clues about the economy, with any signs of a cooling job market likely to bolster expectations for an interest rate cut.

Broader Asian currencies traded in a narrow range. The Chinese yuan stabilised after seeing wild swings this week, although sentiment towards China remained negative as delicate PMI data fuelled heightened fears of an economic slowdown.

The Australian dollar rose slightly ahead of the , while delicate consumer price index data had sparked speculation the central bank would keep interest rates on hold until at least next year.

However, data for the second quarter indicate a slight raise.

The South Korean won rose 0.2% despite strengthening slightly in July, while the Singapore dollar was unchanged.

The Indian rupee was little changed and continued to trade near record highs.