Emerging Asian currencies were mostly steady on Monday against a firmer dollar, as investors remained on the sidelines ahead of US July inflation data and a critical Washington-Beijing deadline to avoid higher tariffs.
The Indonesian rupiah edged 0.2 percent higher, while the Singapore dollar notched up 0.1 percent. The Philippine peso slipped 0.3 percent, with most other regional currencies trading steady.
An MSCI index of global emerging market currencies remained largely flat, while the dollar index held steady following a 0.4 percent decline last week.
Investor focus is on US consumer prices, scheduled for Tuesday, which will offer cues on the Federal Reserve’s path for rate cuts. A hotter-than-expected reading could trigger volatility by dampening expectations for near-term interest rate reductions.
An upside surprise in inflation data would challenge market wagers on a September rate cut, with markets currently pricing in about a 90 percent probability of easing that month and at least one more cut by year-end.
US President Donald Trump’s August 12 deadline for a US-China deal also loomed over markets, with chip policy at the center of the standoff. Expectations are growing for yet another extension.
US imports from Southeast Asia’s biggest economies now carry tariff rates of about 19 percent, well below the levels initially threatened.
Last week, the Trump administration slapped tariffs of 10 percent to 50 percent on dozens of countries, and tacked on 40 percent duties for products found to be illegally rerouted to conceal their origin.
“We expect emerging Asian currencies will benefit from US dollar softness in the second half of year. In particular, domestically driven economies with relatively higher yields on offer could be better positioned to gain from dollar weakness,” said Lloyd Chan, FX strategist at MUFG.
Regional stock markets advanced, with shares in Taiwan up 0.7 percent. Taiwan Semiconductor Manufacturing Co, the world’s largest chipmaker, rose 1.3 percent.
