Asian currencies were flat to higher on Monday, as the greenback gave up earlier gains that followed better than expected US jobs data, with investors turning their attention to sluggish wage growth and what that meant for monetary policy. The greenback climbed on Monday lifted by June jobs growth surging more than expected. However, Khoon Goh, head of Asia research at ANZ Banking Group in Singapore said "the wage numbers were not strong enough for the US dollar to make more meaningful gains", adding Asian currencies are treading water for the day.
The dollar index, which gauges the greenback against a currency basket, was steady at 95.988 at 0609 GMT. Average hourly earnings in the United States increased 0.2 percent in June, lifting the year-on-year wage increase to 2.5 percent from 2.4 percent in May, suggesting some slack still remains in the labour market. The gains in the region were led by the South Korean won , up 0.4 percent.
The Taiwan Dollar was up 0.2 percent, snapping two losing sessions, while the Indian rupee eked out marginal gains, up 0.1 percent. A Reuters poll on Friday found the outlook for emerging Asian currencies has improved compared with the beginning of the year, driven largely by a weaker dollar as expectations for major US tax cuts faded. For the rest of the week, the focus will be on Fed Chair Janet Yellen's testimony to the congress, which is expected to cover recent policy decisions and the state of the economy.
Ahead of Yellen's speech, "there is probably going to some degree of concern with regards to rising advanced economy yields led by European bond yields," said Wei Liang Chang, FX strategist at Mizuho Bank. The yuan inched higher on Monday, up 0.08 percent after China's June consumer price index number came in line with expectations.
Consumer prices rose 1.5 percent in June from a year earlier, while the producer price index climbed 5.5 percent, also in line with expectations. "The main focus will be on the Q2 GDP numbers that will be coming out next week, so we didn't get much reaction to the CPI numbers today," said Goh. China's second quarter gross domestic product is scheduled for release on July 17.
The South Korean won gained as much as 0.5 percent in its second straight session of gains. "To some extent the market could be cautious that Bank of Korea would be coming into the market. We could see some level of central bank smoothing coming in and because of that people are eager to take some profit on their long dollar-won position," said Mizuho's Chang. The BoK is to hold its monetary policy meeting on July 13 to announce interest rates. Thailand markets were shut on Monday for a local holiday.
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