SINGAPORE: Most emerging Asian currencies rallied on Monday as disappointing US jobs data dashed expectations of an imminent Federal Reserve interest rate hike, but gains were capped by caution ahead of a speech by Fed Chair Janet Yellen.
The Chinese yuan slid, however, as local companies bought dollars on dips. The renminbi's weakness also limited gains in emerging Asian currencies.
Indonesia's rupiah led regional appreciation on capital inflows. The Thai baht rose to an over three-week peak on foreign demand for local assets. Malaysia's ringgit also gained on higher bond prices.
The US dollar on Friday fell to lowest in more than three weeks against a basket of six major currencies after data showing US employers added just 38,000 jobs last month, the fewest in more than 5-1/2-years, confounding forecasts for a rise of 164,000 jobs.
The dismal number caused investors to price out a rate increase at the Fed's June 14-15 meeting and cut back expectations of a July increase as well. Markets also scrambled for emerging Asian currencies to unwind recent bearish bets.
Still, investors hesitated as Yellen is due to speak on economic outlook and monetary policy at 1630 GMT, which could keep expectations for a July hike alive.
"What a shocker... The overarching theme remains the fast oscillation in US interest rate expectations where the odds of a June hike has all but disappeared," said Andy Ji, Asian currency strategist for Commonwealth Bank of Australia in Singapore.
"Yellen's speech and is likely to dull the knee-jerk rally somewhat."
RUPIAH
The rupiah leapt 1.4 percent to 13,400 per dollar, its strongest since May 18.
Local investors rushed to add rupiah as most government debts rallied.
Foreign investors increased holdings in Indonesia's government bonds in the previous six consecutive days. In Jakarta stock market, foreigners were net buyers over the prior 11 straight sessions.
BAHT
The baht gained 0.9 percent to 35.30 per dollar, its strongest since May 12.
Foreign investors were net buyers in local stocks and bonds during the previous two consecutive sessions.
The Thai currency has a chart resistance area between 35.28 and 35.33, analysts said.
RINGGIT
The ringgit jumped as much as 1.6 percent to 4.0800 per dollar, its strongest since May 30, as traders rushed to unwind bearish bets on the recent underperforming emerging Asian currency.
Traders, however, sold the ringgit on rallies as the currency is seen approaching a chart resistance level, analysts and traders said.
The ringgit has an initial resistance at 4.0600, its high on May 27, they said. The unit also has another resistance at 4.0463, the 38.2 percent Fibonacci retracement of its depreciation from April to June.
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