Investing.com — Most Asian currencies moved little on Monday, with the dollar suffering steep losses amid growing expectations of interest rate cuts, while the Japanese yen firmed on data showing a rise in average wages.
Elsewhere, the situation remained stable after French election results showed a left-wing coalition quickly winning the largest number of seats in parliament, while President Emmanuel Macron’s party came in second and Marine Le Pen’s far-right party came in second. third place.
Sentiment towards Asian currencies remained tense amid concerns about a possible trade war between China and the European Union. But most regional currencies made some gains after the dollar fell sharply last week amid growing optimism about US interest rate cuts.
Futures and futures remained near one-month lows on Monday. The focus this week is on two-day testimony from , as well as key inflation data.
Japanese Yen Companies Benefit from Strong Pay Data, USDJPY Falls
The Japanese yen was one of the biggest beneficiaries of this dollar weakness, retreating further from its weakest level in 38 years as data pointed to some strengthening in the economy.
The yen pair fell 0.2% and was well below the 162 level it almost reached last week. Data showed Japan’s growth in May was at its fastest pace in more than three decades, as huge wage increases won by unions earlier this year began to take effect.
Higher wages offer better prospects for consumption and inflation, and could ultimately give the Bank of Japan more room to raise interest rates. The BOJ had forecast higher inflation in the coming years due to higher wages.
Still, the focus remained on possible government intervention as the USDJPY remained above 160.
Chinese yuan vulnerable, trade tensions persist
The Chinese yuan pair moved little on Monday, hovering just below a seven-month high, while sentiment towards China remained weak.
The EU moved on Friday to impose strict import duties on Chinese electric vehicles despite objections from Beijing. Chinese officials had also raised the possibility of a trade war.
Such a move does not bode well for China, especially as the country struggles to sustain a sluggish economic recovery. The yuan also suffered from rising doubts about the Chinese economy after a slew of mixed data prints.
The emphasis this week is on Chinese and for more signals on the economy.
The broader Asian currencies remained within a tight range. The Australian dollar pair rose 0.1% after data showed activity in the country unexpectedly slowed in May.
The Singapore dollar and South Korean won pair moved little.
The Indian rupee pair fell slightly but remained around mid-83 levels.
