Most Asian currencies drifted in a narrow range on Friday but were set for monthly gains, while shares rose as investors awaited key US inflation data for clues on global interest rates.
The Thai baht and Taiwan dollar were poised for their first monthly rises since the start of the year, while the Indonesian rupiah was set to record its first monthly gain since February.
Other currencies such as the Singapore dollar and Malaysian ringgit also were set to post monthly rises.
On the day, the Philippines peso and the Indonesian rupiah gained marginally.
The Taiwan dollar, Thai baht and Malaysian ringgit and South Korean won traded between flat and 0.2% lower.
The U.S personal consumption expenditures (PCE) reading later in the day will be the primary focus for traders looking for guidance on the outlook for policy rates.
In Asia, traders are bracing for an inflation data deluge next week from Thailand, the Philippines, Taiwan, Indonesia and South Korea to gauge how their respective central banks could react to control inflation.
“Headline inflation across most of Emerging Asia is now either below or only slightly above central bank targets. Nevertheless, policymakers have struck a slightly more hawkish tone recently due to concerns about currency weakness,” Capital Economics analysts said.
“We think that weaker growth and demand-side inflationary pressure…. will create the conditions for most central banks to cut interest rates before the end of the year.”
Investors are also expecting election results from India, South Africa and Mexico next week that could move markets.
Asian currencies struggle for direction, shares fall; US CPI eyed
“As we await more US data, EM local and FX markets will likely trade to the tune of idiosyncratic factors in the near term,” Barclays analysts said in a note.
In stock markets, shares in Taipei, Seoul, Bangkok and Singapore rose between 0.1% and 0.4% on Friday.
Chinese stocks shrugged off a fall in manufacturing activity for May, which kept the call for additional fiscal stimulus afloat. The benchmark index rose 0.3%.
In Japan, inflation accelerated in May but price growth excluding the effects of fuel eased, heightening uncertainty on the timing of the central bank’s next interest rate hike. The yen was flat, while stocks rose 0.6%.
Japan signalled again that it would take action against excessive currency movement, ahead of the release of data showing whether the country spent money in the foreign exchange market in late April and May.
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