Asian FX steady ahead of US inflation data, China-US tariff deadline
The Indonesian rupiah edged 0.2 per cent higher, while the Singapore dollar notched up 0.1 per cent. The Philippine peso slipped 0.3 per cent, 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 per cent 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 per cent 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 per cent, well below the levels initially threatened. Last week, the Trump administration slapped tariffs of 10 per cent to 50 per cent on dozens of countries, and tacked on 40 per cent 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 per cent. Taiwan Semiconductor Manufacturing Co, the world's largest chipmaker, rose 1.3 per cent. Equities in Indonesia and Malaysia climbed 0.5 per cent and 0.4 per cent, respectively, while shares in the Philippines dropped 1 per cent.
Thailand's stock markets were closed for a public holiday. Investors are awaiting the Bank of Thailand's policy rate decision later this week, with analysts at Nomura expecting the central bank to leave its policy rate unchanged.
"We expect the BoT to sound dovish, flagging the risks of an economic slowdown in H2 and still-high uncertainty around the tariffs, among other factors."
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