NFP ahead: Asia FX under pressure as tech fuels risk-off – MUFG

Asia FX has weakened, according to MUFG analysts Khang Sek Lee and Lin Li. The recent technology-led equity sell-off has eroded support from lower oil prices and US yields. Demand for safe havens has pushed the US dollar and Japanese yen higher. The upcoming US Nonfarm Payrolls report could strengthen expectations of further Fed tightening, putting additional pressure on Asia FX, especially technology-sensitive currencies such as TWD and KRW.

Asia FX faces pressure as risk sentiment weakens

"For Asia FX, the sharp deterioration in risk sentiment threatens to outweigh the relief from lower oil prices and US yields in Asia’s trading session today, especially for tech-sensitive currencies such as TWD and KRW."

"Amidst the risk-off episode, the dollar has regained some ground with the DXY rising towards 101.6 as investors sought safe-haven assets."

"Attention turns to today’s US nonfarm payrolls report, with markets expecting 70k jobs added in October, up from 29k in September."

"Stronger-than-expected JOLTS and ADP data suggest a better-than-expected US labour demand, raising the risk of further Fed tightening, adding another source of pressure for Asia FX."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)