Investing.com — Most Asian currencies remained range-bound on Tuesday, while the dollar hovered near two-month lows, as weak economic readings fueled expectations of an eventual interest rate cut by the Federal Reserve.
But traders remain wary of risk-driven Asian markets, with key US employment data, due this week, set to provide further signals on interest rates.
This kept most regional currencies in a narrow range. The Japanese yen pair rose 0.2% after a sharp decline from 157 yen on Monday.
The Chinese Yuan pair rose 0.1%, remaining close to its highest levels in six months recently, as sentiment towards China remained weak.
The Indian rupee weakens as early vote counts show Modi winning by a narrow margin
The Indian rupee pair rose 0.4% on Tuesday, reversing course after the currency rose sharply in the previous session.
Early counting of votes in the closely watched 2024 general elections indicated that the BJP-led NDA alliance was poised for a much smaller victory than exit polls indicated.
While the victory still represents a rare third term for Prime Minister Narendra Modi, a smaller win portends more difficulties for Modi in implementing economic reforms.
The Australian dollar falls after a set of weak data
The Australian dollar pair fell by 0.1% after a group of weak economic readings paved the way for a disappointing GDP reading on Wednesday.
Australia fell into deficit in the first quarter, while GDP also contracted by 0.9% in the quarter.
Both readings suggested that this might be disappointing. GDP is expected to grow by 1.2% year-on-year, slowing from growth of 1.5% in the previous quarter.
The dollar is at a two-month low, and bets are growing on an interest rate cut in September
Both fell 0.1% in Asian trading, extending sharp losses overnight. Both indexes were also at their weakest levels since early April.
The dollar fell on Monday after data showed manufacturing activity contracted for the second straight month in May.
The reading indicated a further slowdown in the US economy, and traders saw an increase in their bets that the Fed would…
Key labor data is due, especially on Friday, and should provide further signals on interest rates. The Federal Reserve is also scheduled to meet next week, but is expected to keep interest rates unchanged at that time.
Among other Asian currencies, the South Korean won pair rose 0.3% after data in the country showed a more-than-expected decline in May.
The Singapore dollar pair rose by 0.1%.