Trading in Asian currencies was subdued on Friday, with the Thai baht leading laggards, as investors remained on the sidelines ahead of key economic data that will help gauge the US Federal Reserve’s likely future outlook on interest rate policy.
Dull trade persisted across the region, with markets in United States, India, Indonesia, Philippines and Singapore closed on account of Easter holidays.
Weak numbers from the world’s largest economy in the past few days have shown that the aggressive rate hike path adopted by the Fed had started to have a negative impact, which could potentially lead to a recession.
Market participants will now look to US non-farm payrolls data for March, due later in the global day, and the key inflation numbers next week for clues on whether the Fed might take a decision to pause its rate hikes.
Economists polled by Reuters expect non-farm payrolls to have grown by 239,000 in March, following February’s 311,000 gain, adding to signs of a cooler labour market.
Markets are currently pricing in a 53% chance of a 25 basis point hike at the end of the Fed monetary policy meeting in May, while also pricing in rate cuts before year-end.
In Asia, Thailand’s baht and the Chinese yuan led on the downside, dropping 0.2% and 0.1% respectively, even as the Taiwan dollar bucked the trend to rise about 0.2%.
Asian currencies, stocks pressured by fear of global downturn
China, Taiwan and India are set to announce inflation data next week, which could decide their respective central banks’ stances.
“Central banks in the (APAC) region are moving towards the end of their monetary tightening cycles, but driven by different motivating factors – slowing inflation or moderating growth,” analysts from Barclays said in a note.
The Reserve Bank of India already announced a surprise pause in its rate hikes on Thursday, when most analysts had expected a final 25 basis point hike.
Singapore will conduct its monetary policy meeting next week, where it is expected to tighten it rates for the sixth consecutive time amid supply chain disruptions globally.
In stock markets, the Malaysian index was down about 0.1%, while the Shanghai stock exchange rose about 0.4%.
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