The South Korean won led gains among Asian currencies yesterday, as the greenback lost steam after a surprisingly weak reading of factory activity cast some doubt on the strength of economic growth in the United States.
Most Asian currencies edged higher against the US dollar, with the won gaining 0.5 per cent and outperforming its peers after the country's second-quarter gross domestic product was revised up to 3.3 per cent from 3.2 per cent.
The Malaysian ringgit underperformed and fell 0.3 per cent. The Singapore dollar was, however, up 0.07 per cent, trading at 1.3586 per US dollar.
The US dollar retreated after a gauge of American manufacturing released on Thursday showed that factory activity contracted last month for the first time in six months.
Investors are likely to remain on guard for a possible US Fed rate hike this year even if growth in jobs data, released late last night, comes in slightly below market expectations, said Mr Kota Hirayama, senior economist for SMBC Nikko Securities. "If we get a number somewhere around 150,000, the market's rate-rise expectations are unlikely to change much and won't go away," he said, adding that such an outcome might weigh on risk sentiment somewhat.
The jobs market saw payrolls rise by 151,000 last month, slower than analysts' expectations.
The ringgit has declined 1.7 per cent this week and underperformed its peers, as falls in global oil prices underscored worries about Malaysia's oil and gas revenues. Global oil prices have tumbled more than 8 per cent this week. "Its underperformance is mainly due to the fall in oil prices," said senior FX strategist for ANZ in Singapore Khoon Goh, referring to the ringgit.
Sentiment towards emerging Asian currencies weakened in the last two weeks after hawkish comments from Fed officials rekindled bets for US interest rates to rise this year and gave a lift to the dollar.
Market positioning in the Chinese yuan was estimated to be the most bearish since late July, according to a Reuters survey of 18 fund managers, analysts and currency traders conducted from Tuesday through Thursday.
Bullish bets on the Indonesian rupiah were the smallest since late May, when rupiah sentiment had been bearish.