Most Asian currencies traded in a narrow range on Friday, showing limited reaction to a weaker U.S. dollar as risk sentiment remained subdued amid a prolonged sell-off in regional equity markets.
The Chinese yuan edged lower after fresh trade data revealed that exports fell for the first time since March 2024, while the country’s trade surplus unexpectedly narrowed. Meanwhile, the U.S. dollar retreated further from its recent three-month high following weaker private employment figures, which boosted expectations of a potential interest rate cut by the Federal Reserve in December.
The Japanese yen also weakened as disappointing readings on wage growth and household spending dampened hopes for near-term rate hikes by the Bank of Japan.
Chinese Yuan Slips as Trade Data Disappoints
The USD/CNY pair rose nearly 0.1% after China’s trade surplus narrowed more than expected in October. Exports contracted for the first time in over six months, signaling pressure from weaker global demand and ongoing U.S.-China trade tensions.
Although Beijing and Washington reached a limited trade agreement in late October, elevated tariffs and export restrictions continued to weigh on China’s manufacturing and export outlook. Meanwhile, slower import growth highlighted soft domestic demand, adding to concerns about the broader economic recovery.
Dollar Dips as Weak U.S. Jobs Data Fuels Rate Cut Bets
The U.S. dollar index fell sharply from recent highs after data showed rising layoffs in October. Challenger Job Cuts data reported over 150,000 job losses, the highest in two decades, raising fears of a cooling labor market.
Traders increased their bets that the Federal Reserve may cut interest rates in December to support employment growth. According to CME FedWatch, the probability of a 25-basis-point cut rose to 65.8%, up from 59.8% the previous day.
With the U.S. government still facing delays in official labor data due to the prolonged shutdown, investors turned to private sector readings to gauge employment conditions.
Japanese Yen Weakens as BOJ Rate Hike Hopes Fade
The Japanese yen (USD/JPY) slipped slightly on Friday, capping a week of mild declines after recovering from two weeks of heavy losses.
Economic data showed household spending grew less than expected in September, while wage income rose but continued to lag inflation. This combination pointed to ongoing weakness in private consumption, reducing pressure on the Bank of Japan to tighten monetary policy soon.
Across the region, other Asian currencies traded mixed. The Singapore dollar (USD/SGD) rose 0.1%, while the Taiwan dollar (USD/TWD) fell 0.1%. The South Korean won (USD/KRW) dropped 0.5% amid persistent capital outflows and a sharp decline in technology stocks. The Australian dollar (AUD/USD) slipped 0.1%, and the Indian rupee (USD/INR) remained steady at above 88 per dollar.
