Investing.com – Most Asian currencies held in tight ranges on Monday, while the dollar steadied as a strong non-farm payrolls report prompted traders to sharply lower expectations that the Federal Reserve will cut interest rates in June.
Waiting for new US interest rate signals, especially inflation data and Fed comments, also kept sentiment towards Asian markets largely on edge.
Dollar stabilizes as markets reassess June rate cut bets
The index also rose marginally in Asian trade, extending gains following a much stronger-than-expected March report.
A report that showed the U.S. labor market is getting hot showed that markets have seriously reduced expectations that the Fed will cut interest rates as early as June.
Traders now expect the likelihood of a 25 basis point rate cut in June to be around 51%, up from 55% seen last week. The likelihood of a delay rose to 46.8% from 39.6% seen last week, the agency said.
Additional inflation signals will appear on Wednesday based on data for March.
They are expected to give further signals after multiple officials warned the bank was in no hurry to cut rates.
The prospect of higher and longer-lasting U.S. interest rates is putting more pressure on Asian currencies, an idea that had most regional currencies trading in a tight range on Monday.
USDJPY stands still, intervention levels are observed
The Japanese yen remained virtually unchanged on Monday, with the pair fluctuating around the 152 level.
Although the pair fell from 152 last week, its highest level in 34 years, it now appears to be heading back towards those highs. A level above 152 is expected to potentially trigger intervention by Japanese authorities following multiple verbal warnings from Japanese ministers in recent weeks.
The Japanese are reading as expected in February. But wages are expected to rise in the coming months, potentially heralding a more aggressive stance from the Bank of Japan.
Among other Asian currencies, the Chinese yuan was little changed, with the pair hitting a five-month high. In recent sessions, the currency resumed a wave of sales, although further growth of the USDCNY pair was limited by measures of the People’s Bank of China.
The Australian dollar rose slightly while the Indian rupee hovered well above the 83 level.
The South Korean won weakened slightly, with the pair up 0.1%, while the Singapore dollar treaded water.