Asian forex: yuan at over two-year high; other currencies down

China's yuan hit a more than two-year high on Friday, but most other Asian currencies fell and were on track to end the week lower as investors grew cautious ahead of US employment data due later in the global day. Nonfarm payrolls in the US are expected to rise by 180,000 in January, according to a Reuters poll, compared to a 148,000 rise in December.
Optimism about the US economy, bolstered by comments from the Federal Reserve, has undermined Asian currencies this week by triggering a slight recovery in the dollar and US bond yields, although the greenback is still set to end the week lower. "The market is wary of upside surprises in tonight's US monthly jobs report. The odds for US nonfarm payrolls to beat the 180k consensus for January and come in above 200k cannot be discounted," DBS said in a research note.
In Asia, the yuan was among the few gainers, rising about 0.2 percent against the dollar after the central bank set a stronger midpoint fixing. The currency has benefitted largely from stronger midpoint fixes and general dollar weakness, making it among the few Asian currencies set to end the week higher.
The yuan was at its highest level since August 2015, when China shocked global markets with a sharp 2 percent one-off currency devaluation. "Markets will pay close attention to the daily fixing in the next few days to gauge whether there is any potential sign of discomfort about the recent yuan appreciation," OCBC said in a research note.
The Malaysian ringgit was also higher against the dollar as it resumed trade following two days of holidays. It was on track to end the week slightly lower. On the other hand, the South Korean won fell to a more than one-month low against the dollar. It was the biggest intraday loser among its peers. Following suit were the Philippine Peso and the Singapore dollar.
Asian currencies, barring the yuan and the Thai baht were on track to end the week lower. "Foreign sentiment towards emerging-market assets turned mixed, as the market become more cautious on risky assets after FOMC meeting minutes were released on January 31," Standard Chartered said in a research note.
The Philippine peso was on track to be the worst performing Asian currency for the week, shedding more than 1.5 percent to the dollar. The South Korean won was a close second, shedding about 1.3 percent. The yuan on the other hand, was on track to end the week more than 0.7 percent higher, while the baht scraped by with marginal gains.