Investing.com– Most Asian currencies rose on Friday as the dollar’s recovery stalled ahead of Federal Reserve Chairman Jerome Powell’s upcoming speech, where he is likely to provide further hints at interest rate cuts.

The Japanese yen was the best performer in Asia, extending a rally seen earlier this week after BOJ Gov. Kazuo Ueda struck several hawkish notes during a parliamentary hearing. His comments also left markets looking beyond somewhat average inflation data for July.

Asian currencies rose but were weaker for the week as optimism over lower US interest rates was offset by renewed concerns about a slowdown in economic growth.

Japanese yen rises as Ueda says interest rates are too low

The Japanese yen strengthened on Friday, with the currency pair down 0.4%. The currency pair was expected to fall 1.3% this week.

The BOJ’s Ueda said short-term interest rates were still too low and needed to be raised further to reach neutral levels. He also reiterated the bank’s recent message that it would raise rates further if inflation remained stable.

Ueda’s comments boosted the yen, which has been on a roll since the central bank raised rates by 15 basis points in tardy July. The prospect of higher interest rates gives the yen even more upside potential.

But that sentiment was somewhat offset by mixed consumer price index inflation data for July. While both the CPI and CPI rose, a key core inflation measure closely watched by the BOJ fell below 2%, raising questions about how much of a margin of safety the BOJ has to raise.

Dollar falls after Powell talks

Both currencies fell about 0.2% in Asian trading as they failed to recover from seven-month lows.

Now the focus turns to Powell’s speech at the Federal Reserve’s Jackson Hole Symposium on Friday, where he is likely to offer more guidance on interest rates and the economy.

Powell’s speech also came as feeble jobs data earlier this week renewed fears that a weakening labor market would lead to a U.S. recession.

Markets remain divided on a 25- or 50-basis-point rate cut in September, the data showed.

Asian currencies rose on Friday and are set for an average week despite recent losses in the dollar.

The Chinese yuan fell 0.1%, while the Australian dollar rose 0.2%.

The South Korean won fell 0.3%, while the Singapore dollar remained unchanged.

The Indian rupee stabilised after re-testing levels above 84 rupees earlier in the day.