© Reuters.
Written by Ambar Warrick
Investing.com – Most Asian currencies moved slowly on Monday, while the dollar held steady as markets await more signals about monetary policy from several Federal Reserve speakers alongside data sets due later in the week.
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dollar levels
The dollar index now settles at 103.797 points against a basket of 6 foreign currencies without significant movement, while the 10-year yield fell by 0.30%, to record 3.817%, while the two-year treasury bond yield recorded 4.6169, with a slight decline of 0.13%.
As for a pair, it records 1.0692 without movement so far, while a Japanese pair records 134.27 without movement in today’s trading.
The dollar is heading towards its first monthly gain since September 2022, thanks to the fierce expectations of the US Federal Reserve after positive employment and retail sales data, and inflation data revealing a weak pace of slowdown and that it came higher than expectations, as well as producer price index data.
Trading is stable today due to the US Presidents’ Day holiday and the disruption of the US market.
Regional currencies continue to oscillate due to the higher-than-expected US release last week, which in turn imposed some concerns about further monetary tightening as the Federal Reserve returns to the fore.
The dollar rose slightly against a basket of currencies, retaining most of last week’s gains amid strong signs of inflation and hawkish comments from Federal Reserve officials. And trading and dollar index futures at their highest level in six weeks.
The focus this week is on the minutes of the Federal Reserve’s February meeting, which are expected to shed more light on the central bank’s hawkish rhetoric on Wednesday. Fed officials are also scheduled to speak this week including Atlanta Fed Chair Ralph Bostick and Cleveland Fed Chair Loretta Mester.
Also, a broad section of the market expects US interest rates to continue to rise in the near term, as higher-than-expected inflation data and strength in the labor market showed that the Federal Reserve has enough economic room to continue raising interest rates.
Markets are also currently unable to determine the peak that US interest rates may reach this year, in light of the warnings launched by some analysts of the possibility of interest rates rising to more than 6%.
Japan’s monetary policy also comes into focus this week, with the yen moving slightly on Monday. Newly appointed BoJ President Kazuo Ueda is expected to testify on Friday, which will shed more light on the fate of the BoJ’s ultra-loose stance.
Technical data for the dollar index
Dollar and Asian currencies
It remained unchanged as the People’s Bank of China kept benchmark lending rates unchanged for the sixth consecutive month. The move indicated that Beijing plans to maintain its accommodative policy enough to support economic growth as the country returns to exit after three years of Covid-induced lockdown.
While the recovery in China bodes well for the broader Asian markets that rely on the country as a trading destination, the economic data released so far paints a medium picture of an economic recovery.
Southeast Asian currencies rose on Monday, but took huge losses from the previous week. The Philippine Peso jumped 0.7%, and was the best performer on the day.