Investing.com — Most Asian currencies held tight ranges on Monday, as sentiment toward the region was weighed down by weak Chinese trade data, while the dollar fell amid some growing bets on interest rate cuts.
A sharp downward revision to Japan’s first-quarter GDP growth also kept sentiment towards Asia largely negative, while the yen remained fragile and largely focused on potential further government intervention.
Chinese Yuan Weak, PMIs Give Mixed Signals
The Chinese yuan remained weak on Monday, with the pair holding on to levels last seen in November.
China’s purchasing managers’ index (PMI) data showed a mixed picture for the economy. Data on Sunday showed China’s manufacturing sector contracted for a second straight month in June.
But the sector showed growth at its fastest pace in three years.
The mixed signals came amid deteriorating sentiment towards China, as trade tensions with the West and slowing optimism over stimulus measures kept selling pressure on the yuan higher.
Broader Asian currencies, especially those dealing with China, were in a tight range. The Australian dollar was steady, while the Singapore dollar and South Korean won were slightly higher.
The Indian Rupee pair saw some strength last week, remaining below its record highs set in June.
Japanese yen is fragile, USDJPY rises after GDP revision
The Japanese yen remained at its weakest level in 38 years. The pair rose to 161.19 yen on Monday, remaining well above levels that prompted government intervention in May.
Japan’s government unexpectedly revised down its first-quarter data on Monday, with the reading now showing a much deeper contraction than initially forecast.
The reading showed a bleak outlook for the Japanese economy, and also raised doubts about the extent of room available for the Bank of Japan to begin tightening monetary policy.
This idea has been a major weight on the yen, with recent dovish signals from the Bank of Japan being the main driver of the currency’s decline during June.
Dollar down, more price signals awaited
Both indexes fell more than 0.2% on Monday, extending losses incurred on Friday after data showed some slight decline in inflation.
The reading saw traders increase their bets that the Fed will cut interest rates by 25 basis points in September, according to .
The focus this week was squarely on more signals from the Fed. Chairman Jerome Powell is scheduled to speak on Tuesday, while President Jerome Powell is scheduled to speak on Wednesday.
June data is due out on Friday.
