Asian Currencies Trade Mixed as Dollar Firms Ahead of Key U.S. Jobs Data

Asian currencies traded in a narrow, mostly weaker range on Thursday as the U.S. dollar found modest support ahead of a closely watched U.S. labor market report due later this week. Investors across the foreign exchange markets remained cautious, balancing expectations of softer U.S. payroll data against ongoing geopolitical and regional economic pressures.

The Japanese yen and Chinese yuan were largely rangebound, reflecting continued uncertainty stemming from diplomatic tensions between Tokyo and Beijing. The USD/JPY pair hovered near the 157 level, while USD/CNY slipped slightly, keeping the yuan near its strongest level in more than two years. Sentiment toward both currencies was dampened by escalating trade and political frictions, including China’s recent restrictions on shipments of defense-related materials to Japan and the launch of an anti-dumping investigation into Japanese chipmaking inputs. Chinese media have also suggested that Beijing is considering limits on rare earth exports to Japan, a move that could significantly impact Japan’s manufacturing sector.

Economic data added further pressure on the yen, as Japanese wage growth for November came in well below expectations. Softer wage momentum complicates the Bank of Japan’s ability to justify near-term interest rate hikes, keeping the currency under strain.

The U.S. dollar index edged higher in Asian trading after gaining overnight. While recent private payrolls and job openings data disappointed, raising expectations of a weaker U.S. nonfarm payrolls report, stronger business activity indicators suggested the U.S. economy ended 2025 on relatively solid footing. This has left markets divided over the Federal Reserve’s next policy move, with labor market strength and inflation remaining key factors.

Elsewhere in Asia, most currencies showed mild weakness. The Singapore dollar and Taiwan dollar both declined modestly, while the South Korean won was flat and the Indian rupee hovered just below the 90 level. The Australian dollar slipped after retreating from a 15-month high, as weaker-than-expected November trade data showed falling exports and a shrinking trade surplus. Overall, fragile risk appetite and rising global geopolitical tensions continued to keep Asian FX markets on edge.