By Ambar Warrick
Investing.com– China’s yuan lagged gains in its Asian peers on Friday as the country introduced new COVID lockdown measures, while the yen saw volatile trade amid dovish signals from the Bank of Japan (BoJ).
The dollar was mostly flat after Chinese cities Guangzhou and Wuhan implemented new curbs in an effort to stem a recent rise in COVID-19 cases.
This move raises uncertainty about the Chinese economy, which is still reeling after a series of lockdowns this past year. However, the currency rose 0.2% Friday. Wider Asian currencies have benefited from the weaker after strong GDP data.
The and rose 0.2%, with both units predicting a positive week.
The intraday losses were recovered to trade up 0.1% on 146.19 after the at extremely low levels as expected. The central bank also raised its inflation forecasts for 2022, which indicates more short-term pain in the Japanese economy.
Data released earlier Friday showed that October saw a 33 year high. This indicates that there was a similar increase in national inflation for the month.
The yen has been one of the worst-performing Asian currencies in the past year, falling around 30% as a result of a widening gap between foreign and local interest rates.
The yen ended the week higher thanks to a weaker dollar and falling U.S. Treasury yields.
After data showed that sentiment grew faster than expected in the third-quarter, it turned positive. The data showed that the U.S. inflationary pressures didn’t have as severe an impact on economic activity as initially believed.
It was expected that the Federal Reserve could take less hawkish actions in the months ahead due to the lower inflation impact.
“Falling reverse repo usage may be an indicator that the Fed could at least slow the pace of quantitative tightening, but other than that, it looks mostly like speculation ahead of the FOMC meeting for some “pivot” hints,” analysts at ING wrote in a note.
The dollar rose overnight, but yields fell below 4%, which indicates growing expectations for a Fed that is less hawkish.
The market is still pricing in a by Fed rate hike next week. However, the central bank is expected not to raise its rates by much in December.
The stock fell 0.2% on Friday and was forecast to fall 1.4% by the end of this week.