Investing.com — Most Asian currencies moved in a flat-to-low range Monday as the dollar steadied after recent swings, while the focus shifted squarely to upcoming U.S. inflation data for more signals on interest rates.
Mediocre Chinese inflation data weighed on the yuan, while also causing mild weakness in other China-exposed currencies.
Chinese yuan weak due to mediocre inflation and trade fears
The yuan pair rose 0.1% on Monday to hit a two-week high after data released over the weekend provided mixed signals on Chinese inflation.
Inflation rose more than expected in April as continued stimulus from Beijing helped boost demand. But inflation contracted for the 19th month in a row as Chinese business activity lagged.
The inflation data showed that Beijing still had much more work to do to support economic growth.
Traders were also wary of China after reports last week said the Biden administration was preparing more trade tariffs against the country, especially on China’s electric vehicle sector. The move could reignite a trade war between the world’s largest economies.
Other currencies exposed to China posted slight losses on Monday. The Australian dollar pair fell 0.1%, while the Singapore dollar pair rose slightly.
The South Korean won pair fell 0.1%.
Japanese Yen Treads Water, Under Intervention Watch
The Japanese yen was little moved on Monday, with the pair hovering just below the 156 level.
The focus remained on further potential government intervention to support the currency, following at least two interventions earlier in May. The government was seen stepping in to lower the USDJPY pair from a 34-year high to above 160.
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Although 160 is seen as the line in the sand for the government, analysts warned that there could be intervention before that.
Dollar stable ahead of CPI data
The and moved little in Asian trading on Monday.
But traders remained largely biased towards the dollar ahead of key US inflation data due later this week.
Rates, due on Wednesday, will be closely watched as they are likely to play a role in the outlook for US yields.
The dollar saw wild swings last week as mixed economic developments in the US raised questions about exactly when the central bank will start cutting interest rates this year. But while the US economy has seemingly cooled in recent months, inflation is still expected to remain stubborn.
