Investing.com — Most Asian currencies fell Monday as the dollar remained near three-week highs ahead of a U.S. Federal Reserve meeting this week, while mixed economic data from China fueled concerns about a sluggish fueled economic recovery.
The Fed is expected to cut rates by 25 basis points this week. However, expectations of a slower Fed rate cut in 2025 have supported the US dollar.
The price in Asian trading fell slightly lower on Monday, but hovered around a three-week high. These were marginally lower.
The Chinese yuan falls after mixed economic data
The Chinese yuan’s onshore pair rose 0.2%, holding near a two-year high, while the offshore pair was 0.1% higher.
Chinese growth expanded as expected in November as recent stimulus measures from Beijing supported business activity, data showed on Monday.
House prices in China fell marginally in November, marking the slowest decline in 17 months. This trend reflects the first signs of stabilization in the struggling real estate sector, amid government efforts to revive the real estate sector.
However, for November the figures were much lower compared to forecasts and lower than last year, reflecting continued weakness in consumer spending despite policy support.
“Household confidence remains clearly weak, and it remains to be seen whether the ‘strong support’ for consumption promised next year will be effective in stimulating a recovery. We expect that the rollout of supportive policies may take some time, but overall retail sales growth should recover in 2025,” ING analysts said in a note.
The continued slowdown in China’s growth is weighing on the regional currency. Weaker-than-expected retail sales in China and ongoing recovery challenges are creating uncertainty in the broader Asia-Pacific region.
Dollar nears three-week high, Asian currency falls
The dollar index hovered around its highest level since Nov. 26, even as traders positioned for a Fed rate cut next week.
The outlook for the regional currency remains under pressure. The dollar is expected to remain strong next year amid a slower rate-cutting path by the Fed.
Moreover, incoming President Donald Trump’s plans to impose additional tariffs on China and the country’s measures to combat the tariffs are both expected to be positive for the dollar.
The Japanese yen pair rose 0.1% after Reuters reported the Bank of Japan was likely to remain unchanged this week, contrary to earlier expectations of a rate hike.
The Singapore dollar pair edged higher, while the Australian dollar pair gained 0.3%.
The Indian rupee’s pair was largely unchanged and remained near a record high last week.
The South Korean won pair moved slightly higher. The country’s President Yoon Suk Yeol was impeached in a second vote by the opposition-led parliament on Saturday over his attempt to impose martial law in the country.
South Korea’s Finance Ministry vowed on Sunday to quickly continue deploying market stabilizing measures as needed to support the economy after the ouster.
