Investing.com — Most Asian currencies weakened slightly on Monday, while the dollar held steady as traders waited for more signals on Federal Reserve interest rates this week.
The Japanese yen remained vulnerable after wiping out much of the gains the government made on its likely foreign exchange intervention earlier in May. But further losses in the yen were hampered by the potential for more intervention.
Broader currencies weakened slightly as traders remained tense about the path of US interest rates.
Chinese Yuan Weak as PBOC Keeps LPR Unchanged
The Chinese yuan pair rose 0.1% after the People’s Bank left its benchmark unchanged at record lows.
While sentiment towards China improved last week on the back of more stimulus and policy support from Beijing, the yuan saw little strength as increased stimulus in the country pointed to more downward pressure on the currency.
A possible trade war between the US and China also kept investors on edge after China reportedly imposed new trade restrictions on some US companies in apparent retaliation for a recent increase in US tariffs on key Chinese industries.
Concerns about China kept pressure on other currencies with trade exposure to the country. The Australian dollar pair rose 0.1%, while the South Korean won pair rose 0.5%.
The Singapore dollar pair was flat.
Japanese yen vulnerable, more intervention-oriented
The Japanese yen pair rose slightly on Monday and remained close to breaking above the 156 yen level.
Although the pair had fallen to a low of 151 earlier in May following apparent government intervention, it recouped much of these losses as persistent fears of high US interest rates and little action from the Bank of Japan battered the Japanese currency.
Remove ads
.
Still, traders remained cautious about taking the USDJPY pair past the 156 level amid some concerns that it could attract more intervention from the government.
Dollar stable with more signals from the Fed
The and moved little in Asian trading on Monday, stabilizing after last week’s losses.
Some US consumer inflation data were softer than expected and raised hopes that the Fed would cut rates by September. But a series of Fed officials warned that the bank needed more confidence that inflation was retreating.
The focus this week is on more signals from the central bank, with the end-of-April meeting on Wednesday.
A range of Fed officials – mainly members of the bank’s rate-setting committee – are also scheduled to speak this week.
