Asian currencies were higher on Monday, led by the South Korean won as traders in Seoul felt that the weekend did not bring any increase in the tensions between the United States and North Korea. "Risk sentiment is a notch higher today and helping Asian currencies," said Sean Yokota, head of Asia Strategy at SEB, citing the US-China talks.
In a Saturday call with US President Donald Trump, China's President Xi Jinping advised all sides to avoid words or action that raise tensions after Trump warned North Korea that the US military was "locked and loaded." Trump has urged China to apply more pressure on North Korea. The US dollar edged marginally higher on Monday, moving away from lows hit on Friday after weak US inflation data on Friday dampened possibility of another interest rate hike this year.
The dollar index that measures the greenback against six major rivals was up 0.1 percent at 0531 GMT. The South Korean won, battered last week by heightened political tensions on the Korean peninsula, rose 0.4 percent On Friday, it skidded to its lowest level since July 12.
The Malaysian ringgit and the Philippine peso were steady ahead of economic growth data for the two countries due this week. The Philippine central bank had tried to calm investors after the peso hit 11-year lows on Friday, attributing the fall to a reaction to political tensions overseas. The country's economic fundamentals are strong, President Rodrigo Duterte's spokesman said on Monday.
Thai markets were shut for a holiday. The Chinese yuan rose 0.05 percent, shrugging off weaker-than-expected July economic data. Growth in China's output slowed more than expected while investment and retail sales also disappointed, suggesting that the world's second-largest economy is starting to lose some steam as lending costs rise and the property market cools.
Economists do not expect a hard landing, as the government seeks to ensure stability ahead of a Communist Party leadership reshuffle in the autumn. "I think the softer China data is in line with what you saw in exports that manufacturing is weakening and that is the trend you'll see into year end," SEB's Yokota added.
Data last week showed that July exports were weaker than expected. "Right now the driver is more geo-political risk and not economic fundamentals in Asia," Yokota said. The Indian rupee snapped three days of losses, up 0.2 percent, ahead of core inflation data due later in the day.
The consumer price index likely rose 1.87 percent in July, after dipping to a historic low of 1.54 percent in June, well below the central bank's 4 percent medium-term target, a Reuters poll showed. A rebound in July's inflation would lower the scope of further rate easing, DBS said in a note.
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