Investing.com– Most Asian currencies advanced on Thursday, with the Japanese yen pushing higher after recent gains as officials kept up their warnings on potential currency market intervention.
The Australian dollar rose to a fresh three-year high after comments from the Reserve Bank spurred bets on more interest rate hikes in the coming months.
Broader Asian currencies also broadly firmed as the dollar took fleeting support from stronger-than-expected nonfarm payrolls data. While the greenback did firm in overnight trade, its gains stalled on Thursday.
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Japanese yen at 3-week high on intervention chatter
The Japanese yen’s fell 0.6% to around 152.38 yen, reaching its lowest level in three weeks.
The currency continued to firm after Japanese Prime Minister Sanae Takaichi’s sweeping election win over the weekend, with support coming largely from speculation over government intervention in currency markets.
Top currency diplomat Atsushi Mimura on Thursday declined to comment on whether Tokyo had intervened in the yen in recent weeks, and reiterated that the government will closely watch the currency for any outsized volatility.
Mimura also said that Tokyo was in close contact with U.S. authorities over any joint intervention.
His comments helped the yen strengthen further, with soft producer price index data for January doing little to deter the Japanese currency.
Australian dollar at 3-yr high on RBA rate hike comments
The Australian dollar’s pair rose 0.1% and hit its strongest level since early-January, extending gains from earlier this week.
The currency was boosted chiefly by increased bets that the RBA will raise interest rates further after a last week. This came as the bank moves to quash increasingly sticky inflation.
RBA Governor Michele Bullock told lawmakers on Thursday that the bank will raise rates again if inflation becomes “entrenched,” although she specified that it was not clear at the moment whether bringing down inflation required more rate hikes.
Bullock largely reiterated the RBA’s data-driven stance on adjusting rates. But markets are pricing in the possibility of another hike by as soon as May.
Asia FX advances as dollar takes limited support from payrolls
Broader Asian currencies mostly advanced on Thursday, as the dollar took only fleeting support from strong data.
The dollar index and dollar index futures moved little in Asian trade, largely stalling after an overnight bounce. The greenback was still trading down about 0.8% this week.
Focus is now squarely on upcoming U.S. inflation data, due on Friday, for more cues on the world’s largest economy. Before that, weekly data is due later on Thursday.
“Structural drags — Fed succession uncertainty and broader US policy risks — mean the USD will still need additional upside surprises in upcoming data to sustain any rebound,” OCBC analysts said in a note.
Among Asian units, the Chinese yuan’s pair fell 0.15% and was at its lowest level since May 2023. The yuan remained upbeat after a series of strong midpoint fixes from the People’s Bank.
The South Korean won’s pair fell 0.2%, while the Indian rupee’s pair fell 0.3% but remained close to 90.5 rupees.
The Singapore dollar’s pair was flat, while the Taiwan dollar’s pair rose 0.1%.
