Most Asian currencies fell on Tuesday as the dollar found some strength ahead of Federal Reserve Chairman Jerome Powell’s testimony, while the yen remained at 38-year lows.
Sentiment towards Asia also remained tense amid ongoing concerns over new European tariffs on imports from China, which could trigger retaliatory measures from Beijing and ignite a trade war.
Gold rose slightly in Asian trading, steadying after posting sharp losses last week amid growing bets on an interest rate cut by the Federal Reserve.
The Fed is due to provide more clues on this trend later Tuesday. Besides Powell, there are also data due later this week, while a number of other Fed officials are also scheduled to speak.
Japanese Yen Fragile as USD/JPY Reclaims 161 Level
The yen continued to lag its Asian counterparts, with the pair rising 0.1% on Tuesday and back above the 161 yen level.
The currency found little support as a string of weak Japanese economic readings reinforced bets that the Bank of Japan will have limited room to raise interest rates further.
Although the latest average cash earnings data showed overall wages rising, the reading was lower than expected for May. Other recent readings of Japan’s economy have also pointed to continued weakness.
This has kept market players largely short-term, with warnings about government intervention in the currency market continuing to go largely unheeded.
Chinese Yuan Weak, USD/CNY Nears 7-Month High
The Chinese yuan was also among the biggest laggards in recent sessions, with the pair rising 0.1% and approaching a seven-month high.
The yuan has been hit hard by growing concerns about a trade war with the West, after the European Union imposed tariffs on Chinese electric car imports despite Beijing’s objections.
Markets are now waiting to see the impact of imports, and whether China will take retaliatory measures.
The yuan has also been weighed down by waning optimism about China’s economic recovery in recent weeks, especially after a string of weak data in June. The focus this week has been on upcoming data for further clues about the economy.
Broader Asian currencies moved in a flat-to-low range. The Australian dollar steadied after data showed consumer sentiment in the country deteriorated further in early July.
The South Korean won remained stable, as did the Singapore dollar.
The Indian Rupee pair rose slightly and remained near record highs.