[KUALA LUMPUR] South Korea's won and the Malaysian ringgit headed for weekly declines before a US jobs report which may confirm the world's biggest economy is strong enough to withstand an interest-rate hike that would boost the US dollar.
Data due Friday is forecast to show hiring in the US picked up in September, after figures this week indicated continued recovery in the manufacturing and services sectors while unemployment benefits fell to almost the lowest level since 1973.
The greenback was set for its biggest five-day gain since May against major peers as futures suggest a 64 per cent chance the Fed will tighten by December.
"This is the big day for non-farm payrolls," said Sim Moh Siong, a currency strategist at Bank of Singapore Ltd based in the city state.
"We're seeing broad dollar strength and that reflects market concerns about a Fed rate hike in response to the good data that we've seen earlier this week."
The won has slid 1.3 per cent this week to 1,115.38 per US dollar as of 11:30am in Seoul, according to prices from local banks compiled by Bloomberg. It fell 0.3 per cent Friday and reached a two-week low of 1,117.82.
The ringgit has retreated 0.4 per cent to 4.1530 per US dollar since Sept 30, headed for a second week of losses, according to prices from local banks compiled by Bloomberg. It declined 0.2 per cent Friday and touched 4.1575, the weakest since Sept 21.
"The market expects solid employment data after initial claims for unemployment insurance fell," said Min Gyeong Won, a currency analyst at NH Futures Co in Seoul.
"This bolsters the chances of a Fed rate hike by the end of the year, pressuring Asian currencies including the won. In the won currency market, we also are seeing the exporters delaying sale of their dollars as they expect the dollar to go stronger for some time, adding to weaker momentum for the local currency."
A government report due Friday will show Malaysian exports contracted 2.3 per cent in August from a year earlier after declining 5.3 per cent the previous month, according to the median forecast in a Bloomberg economist survey. The trade surplus probably widened to RM6.6 billion (S$2.2 billion) from RM1.91 billion, which was the smallest gap since Oct 2014, a separate survey showed.
South Korea's 10-year sovereign debt fell this week, pushing the 10-year yield up 12 basis points to 1.53 per cent, according to prices from local banks compiled by Bloomberg. The yield is set for its biggest weekly increase since the security was issued in March.