Most Asian currencies moved in a stable to lower range on Thursday as the dollar found some support ahead of a highly anticipated jobs report due later in the week.
The Japanese yen and the Chinese yuan remained within a narrow range as the diplomatic row between Tokyo and Beijing continued without any signs of abating. China was seen imposing new restrictions on Japan this week.
The Australian dollar fell from its lowest level in 15 months after November trade data came in weaker than expected.
Most other Asian currencies weakened as risk appetite remained subdued amid escalating geopolitical tensions worldwide. Awaiting US data also kept markets on edge.
The Japanese yen and the Chinese yuan are weakening amid a diplomatic row.
The Japanese yen (USD/JPY) held near the 157 yen level, while the Chinese yuan (USD/CNY) fell by 0.1% and remained at its strongest level in two and a half years.
The yen came under pressure after data showed that total wage income for Japanese employees grew much less than expected in November. Weak wage growth poses a challenge to the Bank of Japan's plans to raise interest rates.
Sentiment towards Japan and China was affected by the ongoing diplomatic row over remarks made by Japanese Prime Minister Sanae Takaichi regarding Taiwan in late 2025.
This week, China was seen restricting shipments of materials with potential defense uses to Japan, and also opened an anti-dumping investigation into some chip-making materials from Japan.
Chinese media reported that Beijing is now considering restricting rare earth exports to Japan, a move that could have serious consequences for Japan's manufacturing capacity.
The dollar is gaining some ground, awaiting non-farm payroll data.
The dollar index and dollar index futures rose slightly in Asian trading after registering some strength in the overnight trading session.
December's private sector jobs data and November's job openings data came in weaker than expected, prompting bets on a weak reading of December's non-farm payrolls, due on Friday.
But strong business activity readings suggested the U.S. economy was likely to end 2025 on a positive note, leaving markets uncertain about the Federal Reserve's future course of action. Labor market strength and inflation are the central bank's two most important considerations for interest rates, and Friday's reading was likely to influence its outlook.
Most Asian currencies declined in anticipation of the data, while escalating global geopolitical tensions, following a US incursion into Venezuela, kept markets on edge.
Reports showed that Washington was preparing to take over Venezuela’s oil industry in the long term – a move that could fuel further political instability in the region.
The Singapore dollar pair USD/SGD rose by 0.1%, while the Taiwanese dollar pair USD/TWD added 0.4%.
The South Korean won pair USD/KRW remained stable, while the Indian rupee pair USD/INR hovered just below 90 rupees.
The Australian dollar pair AUD/USD fell 0.1%, retreating from a 15-month high after data showed Australia's exports contracted in November, and the country's trade surplus unexpectedly shrank.
