Asian currencies and the U.S. dollar stayed muted on Friday, capping a week of subdued trading. Investors remain cautious as the U.S. government shutdown continues, while the Japanese yen posted strong weekly gains thanks to safe-haven demand.
The U.S. Dollar Index, which tracks the greenback against a basket of major peers, was flat during Asian trading hours. Dollar Index Futures also held steady as of 05:25 GMT.
U.S. shutdown adds to Fed rate cut speculation
The U.S. government entered its third day of shutdown after lawmakers failed to reach a funding deal. The standoff has already delayed key economic data, including September’s nonfarm payrolls report.
Recent weak figures have deepened concerns. ADP payrolls showed a surprise loss of 32,000 jobs in September. Markets now expect the Federal Reserve to cut rates, with futures pricing in nearly 50 basis points of easing by year-end.
ING analysts noted that the ADP miss, combined with missing payrolls data, creates more uncertainty and leaves FX markets without clear direction.
Asian currencies trade flat
The U.S. dollar remains under pressure, yet most Asian currencies showed little movement this week.
- The South Korean won’s USD/KRW pair was flat.
- The Singapore dollar’s USD/SGD edged 0.1% higher.
- The offshore yuan’s USD/CNH pair rose 0.1% as mainland markets closed for holidays.
- The Australian dollar’s AUD/USD was steady after the RBA left rates unchanged.
- The Indian rupee’s USD/INR pair added 0.1%, staying near record lows. The RBI also kept interest rates steady at 5.5%.
Yen strengthens as investors seek safety
The Japanese yen outperformed on safe-haven flows. Analysts at ING said they expect USD/JPY to move lower as haven demand increases.
USD/JPY was set for a 1.2% weekly drop. However, the pair edged 0.3% higher on Friday after Bank of Japan Governor Kazuo Ueda signaled caution. He warned about economic and trade risks, suggesting the BOJ would not rush to raise interest rates.
Ueda said rate hikes remain possible if data supports the move, but his cautious tone limited yen gains.
