Asian currencies get lift from tempered Fed rate view

Most Asian emerging currencies advanced on Friday as the dollar retreated on expectations of slower interest rate hikes by the U.S. Federal Reserve, with Thailand's baht the outlier.

The South Korean won USDKRW rose 0.9% to lead gains among the region's currencies. The Singapore dollar USDSGD, Philippine peso USDPHP and Indonesian rupiah USDIDR appreciated 0.2% each. The Malaysian ringgit USDMYR traded flat.

The dollar index DXY, which measures the greenback against six counterparts, declined 0.3% to 104.52 and aided risk sentiment.

"The attempt for some breather to end the week could be at play, but mostly wait-and-see sentiments could prevail," Yeap Jun Rong, a market analyst at IG, said in a note.

"The lead-up to several key risk events next week may refrain market participants from taking on too much exposure," Rong said.

Data on Thursday showed that U.S. jobless claims rose moderately last week, pointing to a still-tight and strong labour market despite growing fears of a recession.

Markets are focused on U.S. producer price inflation figures later in the day and the country's consumer inflation data due next week for signs on the pace of the Fed's tightening cycle.

The policy-setting Federal Open Market Committee is a key event that will begin on Dec. 13.

Appetite for risky Asian assets was further boosted on hopes of economic recovery in China as the world's second-largest economy and the region's biggest trading partner dropped key parts of its stringent zero-COVID regime.

China's Premier Li Keqiang was quoted by state media on Thursday saying that the implementation of anti-COVID adjustment measures will allow the country's economic growth to pick up pace.

Meanwhile, the baht USDTHB fell 0.3% to be the only outlier among Southeast Asian currencies. Equities in Bangkok SET were flat.

"Foreign investors have been taking profits from the Thai stock market so these foreign outflows could put some pressure on the baht," said Poon Panichpibool, a markets strategist at Krung Thai Bank.

Stock markets in Southeast Asia were broadly trading higher, with equities in Seoul KOSPI up 0.6% and stocks in Kuala Lumpur BURSA advancing 0.3%.

Equities in Singapore STI added 0.2%. Philippine's benchmark index PPSEI rose 0.6% after a public holiday.

On the downside, stocks in Jakarta COMPOSITE dropped 1%.

Separately, China's factory-gate prices showed an annual fall for a second month in November while consumer inflation slowed, indicating weak economic activity and soft demand.

HIGHLIGHTS:

** China's COVID easing seen knocking growth early next year before recovery kicks in

** Indonesian 10-year benchmark yields fall 3.6 basis points to 6.917%

The following table shows rates for Asian currencies against the dollar at 0358 GMT.