Asian currencies struggled for direction on Monday while equities fell, with investors looking for clues on the outlook for inflation, while a mixed US jobs report pointed towards the possibility of a Federal Reserve rate cut in the coming months.
Monthly payrolls data from the world’s largest economy late on Friday revealed an acceleration in jobs growth in February but also showed that unemployment reached a two-year high, boosting chances for a rate cut in June.
Traders now await US consumer price inflation (CPI) data, set to be announced late on Tuesday, in an otherwise light data week, with bets on a US rate cut in June currently at about 73% according to the CME FedWatch tool, up from 64.3% last week.
The dollar index, which measures the strength of the greenback against six major currencies, hovered at 102.73, as of 0645 GMT.
In Asia, both the Thailand baht and the Taiwan dollar reversed early losses to trade flat.
Other currencies, such as the Singapore dollar, Indian rupee and the Malaysian ringgit traded flat to marginally higher, with the ringgit not far from a 26-year low.
Most Asian currencies, equities rise as US rate cut bets firm
On the other hand, the South Korean won ended 0.7% higher, reaching a two-month peak, while the Philippine peso rose about 0.2% to hit a two-month high.
“External market drivers will continue to affect the (Asian) currencies. If the view on the Fed is maintained, and incoming data in the US support the view further, Asian currencies would continue rising against USD,” Sumitomo Mitsui Banking Corp analysts said in a note.
Elsewhere, China reported a rise in consumer prices for the first time in six months for February.
This comes as Asia’s largest economy grapples with a protracted property crisis, crushing consumer sentiment and demand.
Among Asian shares, stocks in Manila, Singapore, Seoul and Mumbai fell between 0.2% and 1.2%, even as Kuala Lumpur firmed 0.3%.
Taiwan equities, which hit multiple record highs last week, spurred by enthusiasm in artificial intelligence stocks, took a breather during the day, slipping about 0.3%.
Indonesian markets were closed on Monday for a public holiday.
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