Asia FX dips after Chinese imports disappoint, dollar rises By Investing.com

Investing.com – Most Asian currencies fell on Tuesday, tracking weaker-than-expected Chinese import data, while the dollar stabilized ahead of more signs on the US economy from headline inflation data due this week.

It fell 0.1% as data showed China fell more-than-expected in April, indicating that domestic demand in the country remained weak despite the post-COVID reopening.

Although it grew more than expected, it still expanded at a slower pace than the previous month, indicating a mixed economic recovery in the country as the domestic manufacturing sector is suffering.

Weak Chinese demand also bodes ill for countries with significant trade exposure to China. A slew of Southeast Asian currencies fell on this notion, with the pair losing 0.6% and 0.4%, respectively.

The deepening of the peso is also heavier.

Broader Asian currencies also fell, as caution kicked in ahead of key US inflation data on Wednesday. It lost 0.2%, while it fell 0.1%.

It was steady as data showed the country slowing in the first quarter of 2023, amid mounting pressure from and.

The price has stabilized after falling sharply from a two-month high hit earlier in May. BoJ Governor Kazuo Ueda reiterated that monetary policy is likely to remain dovish in the near term, which bodes for little support for the Japanese yen.

Data on Tuesday also showed a slowdown in March, indicating continued pressure on the Japanese economy.

Safe-haven demand for the Japanese currency was affected by easing fears of a US banking crisis, as it showed that the recent collapse of several banks had a limited impact on loan activity.

Treasury Secretary Janet Yellen also said that US bank deposits have largely stabilized due to the turmoil seen earlier in the year.

The dollar confirmed this notion, rising 0.1% each in Asian trading, extending its gains from the evening session.

Wednesday is expected to show that price pressures eased slightly in April from the previous month. But any signs of stubborn inflation could spark a hawkish response from the Fed, which recently signaled a more data-driven approach.