Investing.com–Most Asian currencies moved into a flat-to-low range on Monday, paring steep losses over the past week, as worries about interest rates moving longer left traders largely favoring the had dollars.
Still, waning fears of a wider conflict in the Middle East provided some relief for the regional currency as risk appetite improved.
But most regional units are still retaining much of their losses from the past week, as traders steadily priced out expectations that the Federal Reserve would cut rates as early as June.
Dollar stable, more interest rate signals were expected this week
The and both fell slightly in Asian trading on Monday, but remained near the five-month high reached earlier in April.
Easing bets on a rate cut in June boosted the dollar, especially after strong U.S. inflation data and hawkish comments from top Fed officials.
The focus this week is on more clues about U.S. monetary policy, especially from data, which is the Fed’s favorite inflation gauge. The reading is due on Friday and is expected to reiterate that US inflation remained stable in March.
This week will also see more signals about the US economy, with April data expected to provide further insight into business activity.
The Chinese yuan remains stable after the PBOC maintained the prime lending rate
The Chinese yuan pair moved little on Monday after the People’s Bank of China kept its benchmark on hold as expected.
The LPR was kept at record lows while the PBOC tried to keep monetary policy as loose as possible to stimulate economic growth. The central bank is also expected to cut interest rates further this year, following a rate cut in February.
But low interest rates are also expected to keep the yuan under pressure. The USDCNY pair was near a five-month high, above the psychologically important level of 7.2.
Japanese yen flat, BOJ meeting awaited
The Japanese yen pair moved little on Monday, remaining well above the 154 level despite little relief from the dollar.
This left investors wary of possible government intervention, especially as the USD/JPY pair tested a 34-year high at 155.
The focus this week is on the central bank’s first meeting on Friday after a historic rate hike in March. All signals about future rate increases and policy changes will be closely monitored.
Broader Asian currencies moved little as fears of longer US yields persisted.
The Australian dollar pair rose 0.3% after falling to a five-month low last week.
The South Korean won pair rose 0.5%, while the Singapore dollar pair was flat.
The Indian rupee pair rose 0.1% but traded below last week’s record highs.
