Investing.com – Most Asian currencies fell on Monday as the dollar rebounded after a tumbling non-farm payrolls report sent fears over high, long-term interest rates creeping back into markets.
The dollar also benefited from a fall in the US dollar, which hit a one-month low amid political uncertainty after European Union election results showed a broad shift towards right-wing parties.
French President Emmanuel Macron called for early legislative elections later in June after his party lost to Marine Le Pen’s far-right party in EU elections.
Regional trading volumes were limited due to market holidays in China, Hong Kong and Australia.
The dollar strengthens after the Fed meeting and consumer price index (CPI) data is rumored
On Monday, the index rose in Asian trading, continuing its strong growth compared to Friday after a strong report.
Data showed traders sharply lowered expectations for the index.
The payroll data comes just days ahead of this week, when the central bank is expected to keep rates unchanged. But any signals regarding future rate decisions will be closely watched.
Also this week, key inflation data will be published, due on Wednesday. Data is expected to show inflation remains well above the Fed’s annual target of 2%.
Uncertainty over the Fed meeting and interest rates has hit most Asian currencies.
Japanese yen weakens despite improving GDP
The Japanese yen weakened on Monday, with the pair rising 0.3% and once again breaking through the 157 level.
The yen’s weakness came even as data showed Japan’s economy contracted slightly less than expected in the first quarter.
But the economy was still in recession.
GDP data was released later this week, when the central bank is expected to begin tightening policy by cutting back on asset purchases.
But how much the Bank of Japan will be able to tighten remains unclear, given that the economy remains weak.
Other Asian currencies weakened. The South Korean won was unchanged, while the Singapore dollar rose 0.2%.
The Indian rupee pair held at mid-83 but remained near a record high after a sharp fall last week.
The Australian dollar rose 0.1% in trade weakened by the holidays, while the Chinese yuan rose 0.1%.