Asia FX muted as interest rate fears rise, yen remains above 150. By

3 Min Read — Most Asian currencies were little moved on Friday as markets retreated ahead of a series of big central bank meetings next week, while the Japanese yen was slightly strengthened by strong inflation data but close to a one-year low Remained.

The and both moved little in Asian trading but held on to most of the week’s gains. Treasury yields also held steady after falling slightly in overnight trading but remained within sight of multi-year peaks. Data released overnight showed the US helped improve sentiment somewhat.

But the prospect of next week kept traders largely cautious, even though the central bank is widely expected to leave interest rates unchanged. Fed officials have raised the possibility of at least one more rate hike this year, amid stubborn inflation and a strong labor market. The strength of the US economy also gives the Fed more leeway to keep rates high for longer – a scenario that does not bode well for most Asian currencies.

The Japanese yen remains above 150, BOJ waited

The data showed a stronger-than-expected 0.1% increase in October, heralding a similar rise in national inflation.

The reading could potentially set the stage for aggressive action from the , when it meets next Tuesday. While the central bank is widely expected to maintain negative interest rates, it could further alter its yield curve control policy amid persistent inflation, rising bond yields and a severely weakened yen.

The Japanese currency remained above the 150 level against the dollar on Friday, fueling speculation that the government could intervene in currency markets to support the yen. Finance Minister Shunichi Suzuki said the government will continue to respond to the foreign exchange market with a “strong sense of urgency,” although there appeared to be no signs of intervention so far.

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Among other Asian currencies, currencies rose 0.3%, reversing some losses earlier in the week, while the added 0.3% also recovered after steep losses.

Reserve Bank of Australia Governor Michele Bullock this week played down stronger-than-expected inflation, leading to a sharp decline in the Aussie as markets priced in later in November.

The stock rose 0.2%, providing some relief from a sharp drop in oil prices this week, although the currency still remained near record lows.

The numbers were flat as China’s figures showed some improvement through September. But concerns about further dilution of the yuan after Beijing announced a massive bond issuance in the fourth quarter continued to weigh on the currency.

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