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Investing.com – Most Asian currencies rose on Monday while the dollar hovered near six-week lows, as weaker-than-expected U.S. jobs data and less hawkish signals from the Federal Reserve fueled speculation that the bank was finished raising interest rates.

Focus now turns to key upcoming economic data from China, as well as a Reserve Bank of Australia meeting this week for further guidance on key Asian economies.

Sentiment was largely risk-on after data on Friday showed the U.S. grew less than expected in October. The reading signaled a further slowdown in the US labor market, which was a key driver of the Fed’s hawkish stance this year.

This pushed traders into riskier Asian markets, with the and prices rising 0.5% and 0.2%, respectively.

Southeast Asian currencies posted the biggest gains, up 1.2% on the day.

The rate fell 0.2% and remained below the 150 mark against the dollar. Data on Monday showed Japan’s economy grew more than expected in October.

But the outlook for the yen remained weak due to dovish signals from the Bank of Japan.

Governor Kazuo Ueda reiterated that view on Monday, saying that while progress was being made toward the bank’s 2% inflation target, it was still not enough to justify a move away from the Bank of Japan’s ultra-loose policies.

The BOJ’s dovish monetary policy has been the main source of pressure on the yen this year, which has traded near levels last seen in 1990, at the start of Japan’s lost decade.

Dollar at six-week low on Fed pause bets

The exchange rate and both rose slightly in Asian trading after falling to their lowest level since late September on Friday.

U.S. Treasury yields also fell as traders priced in that the Fed will not raise interest rates further this year. There is also a more than 80 percent chance that the Fed will begin cutting rates by June 2024.

But while the prospect of no further rate hikes is a good sign for Asian markets, the central bank is likely to keep interest rates higher for longer, reducing the chances of major near-term gains for Asian currencies.

Chinese yuan companies with trade and inflation data in stock

It rose 0.2% on Monday, benefiting from a weaker dollar and a stronger daily midpoint fixing by the People’s Bank of China.

The focus now turns entirely to data due this week, which is expected to shed more light on the country’s sluggish economic recovery.

The data also comes just a week after a range of official and private data showed further deterioration in Chinese business activity – a trend that further dented investor sentiment towards Chinese markets.

RBA hike in focus, Aussie at 2-month high

It rose slightly on Monday but traded near a two-month high as markets priced in a decline on Tuesday.

The move is widely expected by markets following a recent rebound in Australia. Other data also showed unexpected growth in the third quarter, underpinning expectations of continued inflation.

Although the RBA has left interest rates unchanged since May, it still leaves the door open for further rate hikes, particularly if inflation remains stubborn. The bank had raised interest rates by a total of 400 basis points since the beginning of 2022.

Source : www.investing.com

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