© Reuters.
Investing.com – Most Asian currencies advanced on Thursday, while the dollar eased on tracking comments from Federal Reserve officials touting a potential pause in the June rate hike cycle.
Markets were also somewhat encouraged by the US House of Representatives voting in favor of a bill to raise the debt ceiling and avoid default in the US, with the bill now heading for a final vote in the Senate later this week. This comes ahead of the June 5 deadline for a US default, the prospect of which has kept markets on edge for the past week.
It rose 0.2%, rebounding from its lowest level in six months as it showed that manufacturing activity in the country grew more than expected during May. The data conflicted with what showed a sustained contraction in China’s largest economic engine, although the difference could be linked to a difference in scope between the two surveys.
However, concerns about a slowing economic recovery in China persisted, given that the private survey showed only a marginal improvement in activity. Those concerns, along with a series of weak daily mid-term yuan reforms by the People’s Bank, have hurt the Chinese currency in recent weeks.
Other Asian currencies also rose on Thursday, benefiting from some weakness in the dollar as Philadelphia Fed President Patrick Harker said on Wednesday that skipping a rate hike during the June 14 meeting could allow the bank more time to consider future interest rate decisions.
It added 0.1%, although further gains were delayed by weaker-than-expected data. South Korea also contracted in May.
It was flat, but it was trading above its recent six-month lows against the dollar. A stronger-than-expected Q1 report also indicated a possible upward revision in GDP for the period.
Early losses were trimmed after positive Chinese data, also with stronger-than-expected support for the first quarter.
And the United States fell 0.1% each in Asian trade. While Harker specified that the Fed could still raise interest rates after a pause in June, his comments led to some profit-taking in the dollar at 10-week highs.
The focus is now on US data, due on Friday, for more clues about monetary policy. The prospect of US interest rates staying elevated for a longer period weighed on Asian markets over the past year and is expected to limit gains in the region for now.