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HomeLatestAsian Currencies Weaken as Dollar Recovers; Yen Reverses Gains
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Asian Currencies Weaken as Dollar Recovers; Yen Reverses Gains

Asian currencies experienced a broad weakening on Monday as the dollar regained stability following a plunge on Friday triggered by disappointing payrolls data, which led to increased speculation about potential interest rate cuts by the Federal Reserve.

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The Japanese yen, in particular, reversed its recent gains after apparent government intervention last week helped it rebound from 34-year lows. Despite the intervention, the underlying factors driving yen weakness, such as the interest rate differential between the U.S. and Japan, continued to weigh on the currency.

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The USD/JPY pair rose 0.6% on Monday, nearing the 154 level, as traders remained skeptical about the extent of Tokyo’s capacity to intervene further in the markets.

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In contrast, the Australian dollar strengthened, with the AUD/USD pair edging up before a Reserve Bank of Australia meeting. While the RBA is expected to maintain rates, a recent uptick in inflation has raised expectations of a potentially hawkish tone from the central bank.

The dollar index and dollar index futures both rebounded slightly in Asian trade after significant losses last week. Weaker-than-expected nonfarm payrolls data for April increased speculation about Fed rate cuts, with traders now pricing in the possibility of a 25 basis point cut in September.

Broader Asian currencies retreated after last week’s gains against the dollar, as the prospect of continued high U.S. interest rates kept most regional currencies trading negatively for the year. The Chinese yuan’s USD/CNY pair fell, while the Singapore dollar’s USD/SGD pair rose slightly.

Overall, the focus remains on upcoming speeches by key Fed officials, which could provide further insights into the central bank’s policy direction and impact currency markets in the region.

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