Most Asian currencies started the week on a subdued note with the Taiwan dollar leading gains on Monday, while emerging Asian equities slipped as investors awaited further clues on the outlook for inflation globally.
Market participants will look forward to the US Personal Consumption Index and inflation data from the Europe later this week, which will result in opportunities for their respective central banks to ease their hawkish stances.
“The recent US data have been mixed and until we see a string of stronger data, the dollar is likely to remain under pressure,” Win Thin, Global Head of Currency Strategy at Brown Brothers Harriman said.
“EM could gain near term, but the global backdrop of slow growth and tight liquidity is not conducive to a sustainable rally.”
Data last week showed US business activity held steady in November, but employment in the private sector declined.
The Taiwan dollar rose about 0.2%, and is up about 2.6% since the start of November, headed for its best month since January.
Asian currencies, stocks largely up
“It’s been about positioning and catch up.
The last two weeks have been about beta and USD position unwinding in the region, and we think it’s not yet about fundamental convictions,“ Natwest analysts wrote.
“…TWD was the clearest example of long USD positioning being unwound,” they added.
Other currencies including the Thailand baht, Singapore dollar and the Malaysian ringgit traded flat.
South Korea and Thailand are set to announce their respective policy decisions later this week, where both central banks are expected to stand pat on rates.
Both currencies are presently the best performing emerging Asia units during the quarter, up as much as 3.1%. The South Korean won has logged the highest gains for the month as well, up 2.7%.
The MSCI International Emerging Market Currency Index has gained 2.3% in November, poised for its best month since the start of the year, but was down about 0.2% on Monday.
Among Asian equities, stocks in Singapore, Malaysia and Thailand were down in the range of 0.2% and 0.6%.
Markets in India were closed for a public holiday.
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