Asian Currencies Rise as Dollar Weakens Ahead of Payrolls
Most Asian currencies gained on Friday, while the U.S. dollar slipped. Traders are betting that the Federal Reserve will cut interest rates this month. Markets now await the upcoming nonfarm payrolls data, which could confirm those expectations.
Japanese Yen Strengthens on Trade Deal and Spending Data
The Japanese yen moved higher after President Donald Trump signed an order to enforce the latest U.S.–Japan trade agreement. The deal reduces tariffs on some key Japanese exports, including automobiles, although a 15% universal tariff on all shipments to the U.S. still applies.
Stronger household spending and wage data also supported the yen. These numbers show resilience in Japan’s economy and suggest inflation could stay elevated. Analysts believe this increases the chance that the Bank of Japan may raise interest rates in October, though uncertainties remain due to U.S. tariffs and domestic political risks.
Broader Asian Currencies Show Gains
Other Asian currencies also firmed. The Chinese yuan slipped 0.1% against the dollar, while the Australian dollar added 0.2%. The Singapore dollar gained 0.2%, and the South Korean won edged down 0.1%. Meanwhile, the Indian rupee hovered above 88 per dollar, staying close to record lows as tariff concerns weighed on markets.
Dollar Declines as Fed Rate Cut Bets Increase
The dollar index and its futures fell 0.2% in Asian trade, even though both were still up 0.4% for the week. Weak U.S. labor market readings, such as job openings and unemployment claims, point to cooling conditions.
Nonfarm payrolls data, due later today, is expected to show modest job growth in August. Several Fed officials have signaled that slowing labor momentum could justify rate cuts. Traders now see a 96% chance of a 25-basis-point cut at the Fed’s September 16–17 meeting, according to CME’s FedWatch tool.
