Most Asian currencies strengthened against a weaker U.S. dollar, with the Japanese yen on track for its largest weekly gain since July amid shifting central bank rate expectations.
The rand gained against a softer U.S. dollar, supported by a rally in gold prices, as investors await key U.S. employment data for signals on Federal Reserve policy.
The Canadian dollar strengthened to its highest level in over a week against the U.S. dollar after the Bank of Canada held interest rates steady but signaled growing concern over inflation risks.
The U.S. dollar fell sharply on Thursday as the Japanese yen rallied nearly 2%, driven by hawkish comments from a Bank of Japan official and softer U.S. data that prompted a shift in interest rate expectations.
The yuan has strengthened past a key psychological level against the U.S. dollar, capping a nearly 9% gain over 20 months, but China's central bank is actively signaling its discomfort with the rapid pace of appreciation.
Institutional investors have reduced their US dollar currency hedges to the lowest level since at least 2015, creating an asymmetric risk of a rapid, self-reinforcing sell-off if market sentiment shifts, according to market analysis.
The U.S. dollar weakened for a second consecutive month as investors weighed the Federal Reserve's hawkish inflation stance against a new Treasury bond buyback program that has fueled weak-dollar speculation.
A week-long global sovereign bond sell-off showed signs of abating on Thursday, as benchmark yields in Europe and Australia pulled back from multi-year highs following weaker-than-expected U.S. labor data and cautious comments from a Federal Reserve official.
The British pound rose against the U.S. dollar on Thursday, buoyed by broad-based weakness in the greenback following a sharp drop in USD/JPY that fueled speculation of currency intervention by Japanese authorities.
