Investing.com – Most Asian currencies were held in tight ranges on Tuesday, while the dollar hovered near two-month lows as weak economic data fueled expectations of a possible interest rate cut by the Federal Reserve.
But traders remain wary of risky Asian markets as key US labor market data due this week should provide more signals on interest rates.
This kept most regional currencies in a narrow range. The Japanese yen rose 0.2% after falling sharply from 157 yen on Monday.
The Chinese yuan rose 0.1%, remaining near recent six-month highs as sentiment towards China remained weak.
Indian rupee weakens as early vote count shows Modi narrowly won
The Indian rupee rose 0.4% on Tuesday, reversing the currency’s sharp gains in the previous session.
The early vote count for the closely watched 2024 general elections showed that the BJP-led NDA alliance was set for a far less landslide victory than what the exit polls had signaled.
While the victory still represents a rare third term for Prime Minister Narendra Modi, a weaker victory would mark greater difficulty for Modi in enacting economic reforms.
Australian dollar falls after series of weak data
The Australian dollar fell 0.1% after a string of weak economic indicators set the stage for disappointing gross domestic product data on Wednesday.
Australia faced a deficit in the first quarter, while GDP also contracted by 0.9% for the quarter.
Both readings showed it had the potential to be disappointing. GDP is expected to grow 1.2% year on year, slowing from the 1.5% growth seen in the previous quarter.
Dollar falls to 2-month low as bets rise for September rate cut
And both fell 0.1% in Asian trade, leading to sharp losses overnight. Both indexes were also at their lowest levels since early April.
The US dollar fell on Monday after data showed manufacturing activity contracted for the second month in a row in May.
Data pointed to a further cooling in the U.S. economy, with traders increasing bets against the Federal Reserve.
Key labor data, especially for , is due out this Friday and will provide more information on rates. The Fed is also set to meet next week, but is expected to keep rates unchanged then.
Among other Asian currencies, the South Korean won rose 0.3% after the country’s May data fell more than expected.
The Singapore dollar rose 0.1%.