Asian currencies saw a slight dip on Monday. Traders favored the U.S. dollar as they awaited crucial U.S. inflation data. This data, expected later this week, could provide further guidance on interest rates. The anticipation of key economic indicators kept Asian FX Movements on edge, especially with limited trading volumes due to a Japanese market holiday. The Japanese yen weakened against the dollar, with the USDJPY pair rising 0.3% to 147.07 yen.
The U.S. dollar held steady during Asian trading hours. The dollar index showed minimal movement, stabilizing after a volatile previous week. Traders are closely watching the upcoming consumer price index (CPI) data, due on Wednesday. The CPI reading is expected to show a cooling in inflation for July. If confirmed, this trend might encourage the Federal Reserve to consider interest rate cuts. Despite recent fears of a U.S. recession, strong labor market data has tempered some of these concerns.
The Chinese yuan weakened, with the USDCNY pair rising by 0.2%. Persistent support from the People’s Bank of China has stemmed major losses in the yuan. However, skepticism about China’s economic health remains. This week, traders will focus on Chinese industrial production and retail sales data. These indicators could provide more insights into the country's economic outlook. Broader Asian currencies also drifted lower, with traders showing caution ahead of key economic cues.
In India, the rupee remained near record lows, with the USDINR pair stable after recent guidance from the Reserve Bank of India. The South Korean won (USDKRW) and the Singapore dollar (USDSGD) both saw slight increases. However, the Australian dollar bucked the trend, gaining 0.2% following hawkish messages from the Reserve Bank of Australia last week.
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