As markets expected further signs on the world’s largest economies as well as monetary policy signals from multiple Federal Reserve speakers this week, the majority of Asian currencies dipped on Monday as the dollar stabilized following sharp advances.
In relation to the dollar, the Chinese yuan dropped 0.1% and touched a two-month low. In addition, the yuan traded just below the 7 mark against the dollar as worries about China’s economic recovery grew.
Following a string of dismal readings for April, the biggest economy in Asia’s retail sales and industrial output numbers are the focus this week. In the last month, statistics on manufacturing activity, inflation, and imports all fell short of forecasts, despite the nation rolling down anti-COVID measures put in place earlier in the year.
Other Asian markets were negatively affected by China’s downturn, with riskier Southeast Asian currencies suffering the worst losses on Monday. The Malaysian ringgit lost 0.6% and the Indonesian rupiah dropped by 0.5%.
As one of the few anomalies for the day, the Thai baht increased by 0.3% as it looked that the opposition party supporting democracy had won the nation’s national elections.
According to figures released on Monday, the Thai economy expanded more than forecast in the first quarter.
The producer price index inflation data for April came in less than anticipated, which reduced pressure on the Bank of Japan to swiftly tighten policy, causing the Japanese yen to decline by 0.3%.
However, the consumer price index inflation data for April, which is coming on Friday, will be the main topic of attention for Japanese markets this week. The number is predicted to stay constant from the previous month and be much higher than the BOJ’s yearly objective of 2%.
Other outliers were the Australian dollar, which increased 0.3% after hitting a one-week low last week, and the South Korean won, which increased 0.2%.
Broader As the U.S. dollar maintained a large portion of its recent gains, Asian currencies remained under pressure. The dollar had its best week since September due to expectations that the Fed would not lower interest rates this year.
On Monday, both the dollar index and the dollar index futures remained unchanged. After a weaker-than-anticipated consumer confidence reading on Friday fueled worries about a probable recession this year, markets are now expecting retail sales and industrial output data from the U.S. for more economic indications.
This week, a number of Fed speakers will be in the spotlight, most notably Chair Jerome Powell on Friday. Markets want more information on monetary policy since inflation has persisted despite slowing economic growth.