Elsewhere, the euro was steady after the results of the French election showed a leftist coalition won the most number of parliamentary seats in a snap election, while President Emmanuel Macron’s party came second and Marine Le Pen’s far right party came third.
Sentiment towards Asian currencies remained strained amid concerns over a potential trade war between China and the European Union. But most regional currencies were sitting on some gains after the dollar fell sharply through the past week, amid growing optimism over U.S. interest rate cuts.
The dollar index and dollar index futures steadied near a one-month low on Monday. Focus this week is on a two-day testimony by Federal Reserve Chair Jerome Powell, as well as key consumer price index inflation data.
The Japanese yen was among the biggest beneficiaries of this dollar weakness, pulling away further from its weakest levels in 38 years after data pointed to some strengthening in the economy.
The yen’s USDJPY pair fell 0.2% and was well below the 162 level it had nearly reached last week. Data showed Japanese average cash earnings grew at their fastest pace in over 30 years in May, as the bumper wage hikes won by labor unions earlier this year began to take effect.
Increased wages present a brighter outlook for consumption and inflation, and could eventually give the Bank of Japan more headroom to raise interest rates. The BOJ had forecast higher inflation in the coming years on the back of stronger wages.
Still, focus remained on any potential government intervention, as USDJPY remained above 160.
The Chinese yuan’s USDCNY pair moved little on Monday, hovering just below a seven-month high as sentiment towards China remained weak.
The EU had on Friday proceeded with imposing strict import duties on Chinese electric vehicles, despite objections from Beijing. Chinese officials had also raised the possibility of a trade war.
Such a move bodes poorly for China, especially as the country grapples with shoring up a sluggish economic rebound. The yuan was also battered by increasing doubts over China’s economy, following a slew of mixed data prints.
Focus this week is on Chinese trade and inflation data for more cues on the economy.
Broader Asian currencies kept to a tight range. The Australian dollar’s AUDUSD pair rose 0.1% as data showed home loan activity in the country unexpectedly slowed in May.
The Singapore dollar’s USDSGD pair and the South Korean won’s USDKRW pair moved little.
The Indian rupee’s USDINR pair fell slightly, but remained around the mid-83 level.
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