Investing.com — Most Asian currencies moved in a flat to lower range on Monday, while the dollar stabilized from recent volatility as focus turned squarely to upcoming US inflation data for further signals on interest rates.
Moderate Chinese inflation data weighed on the yuan, while also sparking slight weakness in other currencies exposed to China.
The Chinese yuan is weak amid moderate inflation and trade concerns
The yuan pair rose 0.1% on Monday, reaching a two-week high after data released over the weekend showed mixed signals on Chinese inflation.
Inflation rose more than expected in April, as ongoing stimulus measures from Beijing helped support demand. But inflation contracted for the 19th straight month, as Chinese business activity remained lagging.
Inflation data showed that Beijing still has a lot of work to do in order to support economic growth.
Traders also expressed concern about China after reports last week said that the Biden administration was preparing for more trade tariffs against the country, especially on China's electric vehicle sector. This move may ignite a trade war between the world's largest economies.
Other currencies exposed to China recorded slight losses on Monday. The Australian dollar pair fell by 0.1%, while the Singapore dollar pair rose slightly.
The South Korean won pair fell 0.1%.
The Japanese yen is trading on the water under intervention watch
The Japanese yen moved slightly on Monday, with the pair hovering just below the 156 level.
The focus remained on any potential government intervention to support the currency, after at least two instances of intervention earlier in May. The government was seen intervening to bring the USDJPY pair down from 34-year highs above 160.
Remove ads
.
While the 160 figure is seen as the threshold for the government, analysts have warned that intervention could happen before then.
Dollar stable ahead of CPI data
The index moved slightly in Asian trading on Monday.
But traders remained largely biased towards the US currency ahead of key US inflation data due later this week.
The focus will be on this report – scheduled for release on Wednesday – as it is likely to influence US interest rate expectations.
The dollar saw sharp fluctuations last week as mixed US economic readings raised questions about when the central bank will start cutting interest rates this year. But while the US economy has looked cold in recent months, inflation is expected to remain steady.