Investing.com — Most Asian currencies fell slightly on Monday, while the dollar held steady as traders awaited more signals on interest rates from the Federal Reserve this week.
The Japanese yen remained fragile after reversing a large portion of its gains made as a result of potential currency market intervention by the government earlier in May. But further losses in the yen were hampered by the possibility of further intervention.
Broader currencies fell slightly as traders remained cautious about the path of US interest rates.
The Chinese Yuan is weak as the People's Bank of China kept the LPR unchanged
The Chinese yuan pair rose by 0.1% after the People's Bank of China left its benchmark index unchanged at record low levels.
While sentiment towards China improved over the past week amid more stimulus and political support from Beijing, the yuan saw little strength as increased stimulus in the country indicated more downward pressure on the currency.
A potential trade war between the US and China has also kept investors on edge, after China imposed new trade restrictions on some US companies, in apparent response to the recent increase in US tariffs on key Chinese industries.
Concerns about China kept other currencies with trade exposure to the country under pressure. The Australian dollar pair rose 0.1%, while the South Korean won pair rose 0.5%.
The Singapore dollar pair was flat.
The Japanese yen is fragile, and eyes are on for further intervention
The Japanese yen pair rose slightly on Monday, remaining close to breaking back above the 156 yen level.
While the pair fell to a low of 151 earlier in May, following apparent government intervention, it has reversed the bulk of these losses as persistent fears of higher US interest rates and lack of action by the Bank of Japan have hammered the Japanese currency.
Remove ads
.
However, traders remained cautious about pushing USDJPY beyond the 156 level, amid some concerns that it could attract further intervention by the government.
Dollar flat with more Fed signals
The index moved little in Asian trade on Monday, stabilizing after recording losses last week.
Some weaker-than-expected US consumer inflation readings have raised hopes that the Federal Reserve will start cutting interest rates by September. But a series of Fed officials have warned that the bank needs more confidence that inflation is falling.
The focus this week is on more signals from the central bank, whose late April meeting is scheduled for Wednesday.
A number of Fed officials – particularly members of the bank's interest rate-setting committee – are also scheduled to speak this week.
