Asia FX rises as dollar slips on easing U.S. inflation
Investing.com — Most Asian currencies firmed on Monday as softer-than-expected U.S. inflation readings pushed up hopes that the Federal Reserve will taper its hawkish stance, with focus also turning to more U.S. economic cues this week.
The U.S. dollar steadied after a drop on Friday, as the personal consumption expenditures price index — the Fed’s preferred inflation gauge — read softer than expected for May.
The dollar index and dollar index futures traded sideways in Asian trade after losing about 0.4% each on Friday.
Losses in the dollar benefited most Asian units, although gains were limited following mixed economic readings from the region’s biggest economies. Markets are also still positioning for a Fed rate hike later in July.
The Chinese yuan added 0.1% as a private survey showed that China’s manufacturing sector grew slightly more than expected in June. But the reading was weaker than May’s data, indicating that the few bright spots in the Chinese economy may be running out of gas.
The yuan also benefited from a stronger daily midpoint fix by the People’s Bank of China. But the Chinese currency stuck close to seven-month lows, as a worsening outlook for the economy and the prospect of more interest rate cuts in the country kept the yuan’s appeal dim.
Concerns over China kept gains in most Asian currencies limited. The South Korean won added 0.5%, while the Japanese yen fell 0.2%, even as data pointed to improving sentiment towards the Japanese economy.
The Indian rupee surged 0.3%, hitting a near two-month high amid increasing optimism over the South Asian economy.
The Australian dollar moved little on Monday, amid some uncertainty over whether the Reserve Bank will hike rates on Tuesday.
While overall
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