Most Asian currencies weakened slightly on Monday, while the Dollar steadied as traders hunkered down ahead of a slew of key economic data due this week.
Mixed signals from China weighed on sentiment as data showed a continued, albeit smaller, decline in industrial profits. Top Chinese government officials called on Beijing to provide more financial support to local companies amid a slowing economic recovery.
The yuan fell 0.1% after the People’s Bank of China slightly weakened its daily midpoint fix. This week’s focus will be on Thursday’s Purchasing Managers’ Index (PMI) data for November for more clues on business activity. PMI readings for October had largely missed expectations.
Still, Beijing has more stimulus measures lined up for the coming months, notably a 1 trillion yuan ($139 billion) bond issuance, which is expected to support growth.
But near-term sentiment towards China remained largely weak, which in turn kept broader Asian markets subdued.
The Australian dollar fell 0.2%, with focus also turning to key inflation and retail sales data due later in the week. Reserve Bank of Australia Governor Michele Bullock will also speak this week after warning that inflation is likely to remain sticky in the coming months.
The Indian rupee hovered near record lows, while the Thai baht led gains in Southeast Asia with a 0.4% gain, even as data showed the country swung into a surprise trade deficit in October.
The Japanese yen was one of the day’s better performers, rising 0.4%. Japanese industrial production and retail sales data are also due this week.
Most Asian currencies posted strong gains in November amid growing optimism that the U.S. Federal Reserve is done raising interest rates. This trend had also hit the dollar, pushing it close to three-month lows.
However, markets were now awaiting a fresh batch of economic data for more clues on monetary policy.
Dollar Steady as Inflation, GDP Data Loom
The dollar index and dollar index futures were little changed in Monday’s Asian trading session as markets awaited key economic data from the U.S. this week.
PCE price data – the Fed‘s preferred inflation gauge – is due on Thursday, along with a second reading of third-quarter gross domestic product. Any signs of cooling inflation and economic growth are expected to further bets on a less hawkish Fed, denting the dollar and benefiting Asian markets.
U.S. consumer confidence and PMI readings for November are also due this week, offering more clues on the world’s largest economy.