Investing.com — Most Asian currencies rose Monday, while the dollar retreated ahead of a Federal Reserve meeting this week that will likely provide more signals about the bank’s plans to cut rates.
The Japanese yen was among the better performers, with the currency strengthening further on Monday after three weeks of excessive appreciation. There is also a Bank of Japan meeting later this week, with markets split on a 10 basis point increase.
Broader Asian currencies held steady after enduring a slew of selling last week as uncertainty over the US presidential race and lingering concerns about China battered risk-driven assets.
Dollar falls lower, interest rate cuts in view
The and fell 0.1% each in Asian trading, extending losses after data – the Fed’s preferred inflation gauge – showed some easing in inflation on Friday.
These figures raised expectations that the Fed had almost gained enough confidence to begin cutting rates by September.
The focus this week is entirely on , with the central bank expected to leave interest rates unchanged. But given recent signs of easing inflation and dovish comments from officials, traders will be watching for signals from the central bank on when it plans to cut rates.
The general consensus calls for a cut of 25 basis points in September.
Japanese yen solid, BOJ on tap
The Japanese yen extended its recent gain against the dollar on Monday, with the pair down 0.1% to 153.61 yen. The pair was also close to the lowest level in almost three months.
The yen’s recent appreciation has been driven by a mix of safe-haven demand and a declining carry trade, and was initially fueled by a suspected Japanese government intervention earlier in July.
The focus is now on one this week, with analysts divided over the possibility of the central bank raising rates by 10 basis points.
In addition to a rate hike, the BOJ will also provide more details on how it plans to taper its asset purchases.
Broader Asian currencies edged higher. The Australian dollar pair added 0.2% as it stabilized after suffering steep losses over the past week. A fall in commodity prices had a negative impact on the currency.
The Chinese yuan pair rose 0.1% after suspected government intervention led to wild swings in the yuan last week.
The Singapore dollar and South Korean won pair both firmed slightly.
The Indian rupee pair hovered just below last week’s record highs.
