Asia FX weakens on soft economic data; Aussie slumps as RBA stands pat
Investing.com-- Most Asian currencies weakened on Tuesday tracking a string of middling economic readings from the region, with the Australian dollar falling sharply after the Reserve Bank kept rates unchanged and offered scant cues on monetary policy.
The Australian dollar was the worst performer for the day, down 0.6% after the RBA held rates steady at 4.35%. Governor Michele Bullock said that the bank needed more economic cues before considering any more changes to monetary policy, but warned that inflation risks still persisted.
Other weak economic data also dented the Aussie, as the country logged a surprise current account deficit in the third quarter, while contribution from exports fell more than expected. The readings bode poorly for third-quarter gross domestic product data due on Wednesday.
The Japanese yen steadied above 147, relinquishing some recent gains after data showed inflation in Japan’s capital fell more than expected in November. Easing inflation gives the Bank of Japan less impetus to immediately begin tightening its ultra-loose policy.
Japanese economic conditions were also seen deteriorating, with growth in the country’s services sector missing expectations in November.
China’s yuan was flat, even as a private survey showed the country’s services sector grew more than expected in November. But the yuan was presented with new downside risks from growing fears of another epidemic in the country, as local media reports showed a spike in respiratory illnesses across major Chinese cities.
Reuters also reported that Chinese state banks were engaging in dollar swaps to support the yuan in the open market.
South Korea’s won fell 0.2% as data showed consumer inflation grew less than expected in
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