Asia FX gains, dollar at 6-week low as Fed pause bets soar
Investing.com-- Most Asian currencies strengthened on Monday, while the dollar hovered near six-week lows as softer-than-expected U.S. payrolls data and less hawkish signals from the Federal Reserve drove up bets that the bank was done raising interest rates.
Focus now turns to key upcoming economic readings from China, as well as a Reserve Bank of Australia meeting this week for more cues on major Asian economies.
Sentiment was largely risk-on after data on Friday showed that U.S. nonfarm payrolls grew less than expected in October. The reading signaled more cooling in the U.S. labor market, which has been a key driver of the Fed’s hawkish stance this year.
This drove traders into more risk-heavy Asian markets, with the South Korean won and the Thai baht adding 0.5% and 0.2%, respectively.
Southeast Asian currencies saw the biggest gains for the day, with the Malaysian ringgit up 1.2%.
The Japanese yen fell 0.2%, steadying below the 150 level against the dollar. Data on Monday showed that Japan’s services sector grew more than expected in October.
But the outlook for the yen remained weak following dovish signals from the Bank of Japan.
Governor Kazuo Ueda furthered this notion on Monday, stating that while progress was being made towards reaching the bank’s 2% inflation target, it was still insufficient to justify a pivot away from the BOJ’s ultra-loose policy.
A dovish BOJ has been the key source of pressure on the yen this year, which was trading close to levels last seen in 1990, during the onset of Japan’s lost decade.
The dollar index and dollar index futures both rose slightly in Asian trade after sinking to their lowest levels since late-September on Friday.
U.S. Treasury yields also retreated, as traders
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