Asian currencies subdued against dollar

Asian currencies were subdued against the dollar on Tuesday as investors focused on US Federal Reserve Chairman Jerome Powell's testimony before Congress later this week for clues on monetary policy. Regional currencies weakened in the previous session after surging US jobs growth in June dampened expectations the Fed will deliver a large interest rate cut later in July. "Market reflux post-NFP (US nonfarm payrolls) may persist until we get more potential clarity from Fed guidance tonight," OCBC bank said in a note to clients.
"Overall, expect the USD to continue to flex against both the majors and the Asians," it added. Malaysia's ringgit was 0.1% lower ahead of a central bank rate decision later on Tuesday. Bank Negara Malaysia is expected to hold its benchmark rate steady to assess economic risks and the effect of a previous rate cut. Indonesia's rupiah declined 0.1%. It has gained nearly 3% since late May when it touched its weakest level in 2019, prompting the central bank to affirm its support for the unit.
South Korea's won gained 0.2% after the sharpest losses among its regional peers in the previous session and against the backdrop of a trade dispute with Japan. Talks are planned for as early as this week on Japan's tighter export curbs on key materials used by South Korean makers of electronic chips and smartphone displays, the Yomiuri newspaper said on Tuesday. China's yuan was unchanged ahead of its June trade and inflation readings later this week.
The Thai baht weakened 0.1% on the day but remained the region's best performer this year. "Clearly, the THB performance is out of sync with the underlying weak economic trends," ING said in a note, adding that domestic politics continued to overhang the economy three months after a general election.
Domestic demand remains soft and global trade wars have crimped exports, prompting the central bank to increasingly hint at a policy easing. Qi Gao, Asia FX Strategist at Scotiabank, said investors are worried about potential measures after the central bank governor said on Monday they had sometimes taken action on excessive moves in the baht.