(Reuters) - Asian currencies strengthened against the dollar on Friday, with South Korea’s won leading the pack, as bets increased that the U.S. Federal Reserve would cut rates further after a host of weak data deepened fears of a slowdown.
The market’s focus now shifts to a key U.S. jobs report due later in the day, and any signs of weakness in the print will boost rate-cut expectations and pressure the greenback.
“Slightly lower dollar, some adjustments in market positioning ahead of the weekend and expectations of Fed rate cuts are supporting Asian currencies,” said Irene Cheung, a senior strategist for Asia at ANZ Banking Group (Singapore).
“With markets already fully loaded for an October FOMC (Federal Open Market Committee) rate cut, it may require an outsized positive surprise from the NFP (non-farm payroll) numbers to shake out the very short-term dollar bears,” OCBC said in a note.
Thailand's baht THB=TH, Asia's best performing currency so far this year, added 0.3% for the day and was set to close the week 0.5% higher.
The Philippine peso PHP= was 0.2% higher as investors shrugged off data showing September inflation came in at its slowest in more than 3 years.
Malaysia's ringgit MYR= cut earlier gains to trade slightly higher after a surprise fall in August exports.
India's rupee INR=IN gained marginally, showing little reaction to a 25 basis point rate cut that was in line with expectations.
The Korean won KRW=KFTC outperformed Asian peers to notch up a 0.8% gain, after having declined for three out of four sessions this week.
Japanese Prime Minister Shinzo Abe on Friday maintained an offer to talk to North Korea’s leader even though missile launches by the country earlier this week had upped the risk ante in the region and pressured the won.
A bitter feud with Japan over history, trade and territory has added to the fallout from the U.S.-Sino trade war to pull down the trade-sensitive won, making it Asia’s worst performing currency so far this year.
The unit was set to close the week 0.5% stronger.
Reporting by Devika Syamnath in Bengaluru; Editing by Subhranshu Sahu