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>>Asian forex stalls with the yen and yuan staying subdued amid a tense diplomatic dispute, as the dollar rises ahead of crucial payroll data.

Asian forex stalls with the yen and yuan staying subdued amid a tense diplomatic dispute, as the dollar rises ahead of crucial payroll data.

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2 days ago

Asian FX Stagnation

The yen and onshore yuan traded in narrow ranges this week, hovering near 152.5 per dollar and 7.22 respectively. Heightened diplomatic friction among major Asian powers has dampened currency moves, prompting investors to adopt a wait‑and‑see stance. Meanwhile the U.S. dollar index rose past the 105.0 level, buoyed by hawkish Fed commentary ahead of the February non‑farm payrolls.

Geopolitical Drivers

Escalating territorial disputes and a cancelled bilateral economic dialogue have curtailed cross‑border capital flows, fostering a risk‑off mood. Both the Bank of Japan and People’s Bank of China kept daily fixes steady, signaling readiness to intervene if volatility spikes. Market participants view the diplomatic uncertainty as a suppressor of volatility rather than a reflection of fundamentals.

Dollar Momentum and Payroll Outlook

The upcoming payroll report is seen as the key catalyst; a strong jobs number could lift the dollar further, pressuring the yen and yuan, while a weak figure may reverse recent gains. Analysts forecast about 180,000 jobs for February, a level that would reaffirm inflationary pressures. Traders are bracing for a potential “volatility explosion” once either the diplomatic row eases or the U.S. data surprises.