Most Asian currencies moved higher on Thursday, with the Japanese yen firming after recent gains as officials continued to warn that intervention remains a policy option. The Australian dollar also rose, reaching multi-year highs after remarks from the Reserve Bank of Australia that reinforced the possibility of further interest rate increases.
The broader region generally strengthened as the U.S. dollar only briefly benefited from stronger-than-expected nonfarm payrolls data overnight. While the dollar had shown some firmness in earlier trading, gains stalled through Asian sessions.
Yen firm on intervention talk
The yen continued to strengthen, with USD/JPY falling about 0.6% to around 152.38, a three-week low for the pair. Momentum behind the currency came in part after Japanese Prime Minister Sanae Takaichi's decisive election victory over the weekend, which fed expectations that authorities could act to limit excessive currency moves.
Top currency diplomat Atsushi Mimura declined on Thursday to confirm whether Tokyo had intervened in the yen in recent weeks. He reiterated that the government will monitor the currency closely for any outsized volatility. Mimura also said Tokyo was maintaining close contact with U.S. authorities about any potential joint intervention.
The comments from Mimura supported the yen's gains further, and softer producer price index data for January did little to weaken that momentum.
Australian dollar climbs after RBA comments
The Australian dollar rose about 0.1% in AUD/USD terms and hit what was described as its strongest level since early-January, extending gains recorded earlier in the week. Earlier in the session the currency was reported at a fresh three-year high.
Market participants increased bets that the Reserve Bank of Australia will lift rates again after the bank delivered a 25 basis point hike last week, a move officials say is intended to tamp down sticky inflation pressures.
RBA Governor Michele Bullock told lawmakers on Thursday that the bank would raise rates again if inflation became "entrenched," while also saying it was not clear at present whether additional hikes would be needed to bring inflation down. Bullock largely reiterated the RBA's data-dependent approach, even as markets began to price in the possibility of another increase as soon as May.
Dollar stalls after payrolls; focus shifts to U.S. inflation
Across the region the dollar index and related futures showed little net movement in Asian trade, stalling after an overnight bounce. The greenback remained down roughly 0.8% on the week.
Investor attention has turned to U.S. consumer price index inflation data due on Friday for further guidance on the U.S. economy. Before that release, weekly jobless claims data are scheduled for later on Thursday.
Analysts at OCBC noted that structural headwinds - Fed succession uncertainty and broader U.S. policy risks - mean the U.S. dollar will need additional upside surprises in forthcoming data to sustain any rebound.
Movements across Asian currencies
- The Chinese yuan appreciated, with USD/CNY falling about 0.15% to its lowest level since May 2023, supported by a series of stronger midpoint fixes from the People’s Bank of China.
- The South Korean won strengthened as USD/KRW fell roughly 0.2%.
- The Indian rupee gained, with USD/INR down about 0.3% and lingering close to 90.5 rupees.
- The Singapore dollar was largely unchanged, with USD/SGD flat in Asian trading.
- The Taiwan dollar saw USD/TWD rise around 0.1%.
Overall, Thursday's session left most Asian currencies firmer against the dollar as market participants weighed central bank caution, intervention talk, and upcoming U.S. economic releases.