Investing.com – Most Asian currencies ranged from flat to low on Monday and suffered sharp losses over the past week as concerns over higher and longer interest rates kept traders leaning heavily toward the dollar.
However, easing concerns about wider conflict in the Middle East brought some relief to regional currencies as risk appetite improved.
But most regional units still retained most of their losses from last week as traders gradually dampen expectations that the Federal Reserve will cut interest rates as soon as June.
The dollar is stable, new interest rate signals are expected this week
Both indexes fell slightly in Asian trading on Monday but remained close to more than five-month highs hit earlier in April.
Easing bets on rate cuts in June helped strengthen the dollar, especially after strong U.S. inflation figures and hawkish comments from senior Fed officials.
This week the focus will be on more signals about US monetary policy, especially data that is the Fed’s preferred measure of inflation. The results will be released on Friday and are expected to confirm that US inflation remained stable in March.
There will also be new data on the US economy this week, with April data providing further insight into business activity.
Chinese yuan stable after PBOC maintains base lending rate
The Chinese yuan pair was little changed on Monday after the People’s Bank of China, as expected, left the benchmark rate unchanged.
The LPR remained at record lows as the PBOC tried to keep monetary policy as loose as possible to support economic growth. The central bank is also expected to continue cutting rates this year after cutting to levels in February.
But low interest rates are also expected to keep the yuan under pressure. USDCNY was close to a five-month high, above the psychologically important 7.2 level.
Japanese yen unchanged, Bank of Japan meeting expected
The Japanese yen was little changed on Monday but remained well above the 154 level as the dollar weakened slightly.
This has made investors wary of any potential government intervention, especially after USDJPY tested a 34-year high at 155.
This week’s focus will be on Friday, the central bank’s first meeting since its historic rate hike in March. Any signals of future rate increases and policy changes will be closely monitored.
Asian currencies were little changed as concerns about rising US interest rates remained in place.
The Australian dollar rose 0.3% after falling to a five-month low last week.
The South Korean won rose 0.5%, while the Singapore dollar remained unchanged.
The Indian rupee rose 0.1% but traded below record highs reached last week.