By Ambar Warrick
Investing.com — Most Asian currencies were muted on Friday amid growing concerns over the path of U.S. monetary policy, while the Chinese yuan was among the best performers this week on a string of strong economic readings.
The rose 0.1%, and was set to close the week nearly 0.8% higher.
A private survey showed on Friday that Chinese grew at a faster-than-expected pace in February. The reading comes after government data showed this week that China’s expanded at its fastest pace in over a decade, cementing a post-COVID recovery in the country.
Gains in the yuan spilled over into other China-exposed currencies, with the and the both set to close the week higher.
A recovery in China bodes well for countries with a large trade exposure to the Asian giant, and could help improve the prospects for Asian economies this year. Friday’s positive data also came ahead of a meeting of high-level Chinese officials, which begins on Saturday.
But most other Asian currencies kept to small ranges on Friday, as surged overnight after a drop in weekly indicated resilience in the jobs market. The dollar also steadied on Friday against a basket of currencies, with the and falling 0.1% each.
The greenback was set for small weekly losses.
Overnight comments from Federal Reserve officials offered some clarity on where U.S. interest rates could peak this year, with Atlanta Fed President Raphael Bostic backing a 25 basis point hike during the March meeting.
But officials also warned that the Fed’s stance will be largely data-dependent, which, considering that read higher-than-expected in January, could keep interest rates higher for longer.
The rose 0.1%, and was nursing some losses for the week as data highlighted weakening economic trends in the country. eased from an over 40-year high in February, data showed on Friday, but still remained pinned at relatively high levels.
The rose 0.1% and was set to add 0.8% this week as data showed that the grew 7% in 2022, vastly outperforming its Asian peers. Indian also grew more than expected in February, indicating continued resilience in the South Asian economy.
Dollar stabilizes near five-week high ahead of more debt ceiling talks
Investing.com – The U.S. dollar stabilized in early European trade Tuesday, just off a five-week high helped by its safe haven status as the standoff in Washington over the U.S. debt ceiling continued.
At 03:15 ET (07:15 GMT), the , which tracks the greenback against a basket of six other currencies, traded largely flat at 102.250.
The potential for a U.S. default of its debts if a deal is not done to lift the country’s borrowing limit, which Treasury Secretary Janet Yellen reiterated could be hit as soon as June 1, has helped the dollar push higher of late, with traders seeking the greenback given it is often used as a safe haven in times of stress.
The main parties are expected to meet once more later Tuesday, with President Joe Biden expressing confidence a deal can be done, but Republican House of Representatives Speaker Kevin McCarthy said on Monday that the two sides were still far apart.
“Unless we see truly encouraging progress, investors’ fears may keep growing,” said analysts at ING, in a note. “Barring positive news on this end, we think the balance of risks remains tilted to the upside for the dollar for now, which should see safe-haven flows as risk sentiment stays subdued.”
Aside from this, traders are likely to focus on the release of U.S. data for April, which is expected to show sales grew 0.8% on the month in April, an improvement from the dramatic slump of 0.6% last month.
The raised interest rates last week for a 10th straight time, but hinted that it may be about to pause its aggressive policy tightening as it studies incoming economic data and assesses the impact of the tightening to date.
Inflation remained elevated in April, even if slightly lower than the prior month, and a number of Fed officials have said in separate addresses that interest rates were likely to stay higher for longer if prices continue to remain substantially above the Fed’s 2% target.
Elsewhere, rose 0.1% to 1.0880, after bouncing off a five-week low overnight, ahead of the release of preliminary first quarter for the euro zone.
This is expected to show the region barely scraped growth in the first three months of the year, rising 0.1% on the quarter and 1.3% on an annual basis.
Also of interest will be the for May, which is expected to show a deterioration of sentiment in the eurozone’s largest economy.
fell 0.3% to 1.2494 after the U.K. unexpectedly rose to 3.9% in the three months to March, raising the likelihood of the Bank of England pausing its run of increases when it next meets in June.
dropped 0.3% to 135.78, fell 0.3% to 0.6683, while rose 0.2% to 6.9643 with the yuan trading near a two-month low after Chinese data showed and grew less than expected in April.
rose 0.1% to 19.6861 as Turkey’s presidential race heads to a runoff with incumbent Tayyip Erdogan leading his opposition rival.
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In 2009, the brothers founded Finvasia as a Foreign Institutional Investor (FII) in India. Setting out as money managers for prominent hedge funds and institutional investors, they were struck by the flaws of the financial industry in India.
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From thought to action there is only one step
Spanning several countries and industries, including technology, healthcare, and real estate, Finvasia marks a new era of engineering-driven, conflict-free and ethical businesses that shape the industry they operate in. Embarking on a multidisciplinary journey, Sarvjeet and Tajinder Virk worked towards creating an umbrella group servicing multiple verticals.
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In 2023, Finvasia obtained an investment banking license and plans to launch a Global EMI and a neo-bank in India soon. This expansion demonstrates the company’s commitment to offering innovative financial solutions to its growing customer base.
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Asia FX dips on weak Chinese data, hawkish Fed comments
Investing.com — Most Asian currencies retreated on Tuesday as disappointing Chinese economic data posited a weak outlook for the region’s largest economy, while hawkish comments from Federal Reserve officials also brewed uncertainty over the path of U.S. interest rates.
fell 0.1% and traded near a two-month low after data showed and grew less than expected in April. The readings, which come on the heels of several weak economic indicators earlier this month, point to a staggered recovery in Asia’s largest economy, even after the country relaxed most anti-COVID measures earlier this year.
The weak data also saw markets positioning for a potential 25 basis point rate cut by the People’s Bank next month, which is likely to fuel further weakness in the yuan. The currency was trading just shy of the psychologically important 7 level against the dollar.
Weakness in China spilled over into other Asian currency markets, particularly those with a high trade exposure to the country. The fell 0.1%, while the led losses across Southeast Asia with a 0.3% dip, as traders also locked in recent profits in the currency.
The fell 0.1%, also coming under pressure from a sharp drop in in the face of rising interest rates and worsening economic conditions.
Sentiment towards risk-driven assets was also rattled by a slew of Federal Reserve officials warning that the bank could still act further to bring down stubborn inflation. said in separate addresses that interest rates were likely to stay higher for longer, with some officials also raising the possibility of more interest rate hikes.
The and steadied near a one-month high on Tuesday, after logging small losses in the prior session. But the greenback still strengthened against the by about 0.1%.
The dollar moved little this week as markets hunkered down in anticipation of more U.S. economic signals this week, starting with and due later in the day.
Several more Fed speakers are also lined up for the week, most notably on Friday.
show that markets are still positioning for a pause in the Fed’s rate hike cycle in June. But traders are also factoring in a small chance of a 25 basis point hike.
The prospect of U.S. rates remaining higher for longer bodes poorly for Asian currencies, as the gap between risky and low-risk yields narrows.
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