Investing.com– Asian currencies and the U.S. dollar were largely subdued on Friday as investors weighed rising energy costs and geopolitical tensions, while the yen held firm after a safe-haven rally driven by concerns over global growth and technology-sector valuations.
The US Dollar Index traded largely flat at 101.60 by 03:33 GMT, remaining near a three-week low. It was set for a second straight weekly loss.
Yen hits 1-mth high on weaker dollar, safe-haven demand
The Japanese yen’s USD/JPY pair edged up 0.1% to 156.90 yen on Friday, after dropping nearly 1% in the previous session.
The yen strengthened to its highest level in more than a month, as investors sought safety amid concerns about the sustainability of artificial intelligence-related investments and escalating Middle East tensions.
Meanwhile, falling U.S. Treasury yields reduced support for the greenback. The benchmark 10-year Treasury yield approached a one-month low of 4.953%, reflecting demand for safer assets.
Oil prices remained a major concern for regional currencies, with Brent crude trading near $114 a barrel on Friday after surging 4% on Thursday as attacks in Saudi Arabia heightened fears of supply disruptions.
Higher crude prices threaten to fuel inflation and complicate the monetary policy outlook across Asia, particularly for energy-importing economies such as Japan, India and South Korea.
Asia FX subdued; central bank meetings awaited
Elsewhere in Asia, the Chinese yuan’s onshore USD/CNY and offshore USD/CNH pair traded largely unchanged, remaining near four-year lows.
The South Korean won’s USD/KRW pair edged 0.2% lower, while the Singapore dollar’s USD/SGD traded flat.
The Indian rupee extended losses on Friday, erasing most of sharp gains recorded earlier this week on RBI’s support measures.
The USD/INR pair rose 0.3% to 95.109, after jumping 0.4% in the previous session. It had fallen for nine straight sessions through Wednesday.
The Australian dollar’s AUD/USD pair edged down 0.1%.
Investors were also preparing for a series of major central bank decisions next week.
The U.S. Federal Reserve is expected to hold interest rates at 3.75%-4.00% on October 28, while the European Central Bank and Bank of Japan are due to announce policy decisions on October 29 and 30, respectively.
For the yen, attention will centre on the Bank of Japan’s inflation outlook and signals on the timing of further rate increases, while traders will also remain alert to the possibility of Japanese currency intervention.
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