© Reuters.
Investing.com – Most Asian currencies maintained a tight range on Tuesday as concerns about slowing economic growth in China continued to weigh, with focus shifting to more upcoming signs on the US economy and monetary policy.
The dollar fell near 15-month lows as weak inflation readings led markets to price in potential by the Federal Reserve in the coming months. The pair was down and about 0.1% each, moving below the 100 level.
But despite weakness in the dollar and expectations that US interest rates were near peaking, Asian currencies saw little inflows, as data showed fading sentiment towards the region.
It is trading sideways, while it has recovered some of the sharp losses from the previous session.
The price-sensitive index rose 0.3%, while it added 0.2%.
US Retail Sales, Industrial Production data loom large
Markets are now awaiting the US and the data, due for release later in the day, for more clues about the world’s largest economy, and the likely path of interest rates.
June Retail Sales is expected to improve from the previous month amid strong consumer confidence. But higher retail spending also points to more consumer inflation – a trend that could attract more rate hikes from the Fed.
Industrial production growth is also expected to accelerate in June, indicating some resilience in the US economy.
While markets are betting that the Fed will pause its cycle after a final rally later in July, any signs of resilience in inflation and the US economy give the central bank more room to continue raising interest rates – a scenario that bodes for weakness for Asian currencies.
The Chinese Yuan sees little support after weaker GDP and stimulus bets
Shares traded sideways on Tuesday, remaining under pressure despite a strong midpoint hold by the People’s Bank of China (PBOC).
The currency was taking huge losses from Monday after data showed that growth in China’s gross domestic product slowed in the second quarter, as the post-COVID economic recovery dried up.
The weak economic reading has raised expectations that the People’s Bank of China will roll out more stimulus measures in the coming months. But while these factors can support growth, they are also expected to affect the yuan, as monetary conditions soften further.