Most Asian currencies fell on Tuesday, with the South Korean won suffering the most losses, while equities were subdued after traders adjusted interest rate cut bets from the US Federal Reserve as they awaited a key jobs report.
The South Korean won and the Indonesian rupiah led the losses for the day, falling as much as 0.7% and 0.3% respectively, with the former dropping to a nearly three-week low.
The U.S non-farm payrolls data - a key labour market report - and the non-manufacturing ISM data for November are expected during the week, which market participants will look to for further clarity on interest rates.
Investors are currently expecting the Fed to cut interest rates by the first half of next year.
At 0345 GMT, the dollar index, which measures the strength of the greenback against six major currencies, was steady at 103.63.
“As such, there is ample space for the market to pare back on rate cut expectations and this could keep the USD supported,” analysts from Maybank wrote.
Asian currencies: South Korean won records biggest monthly gain
“We still believe that the USD is a sell on rally, however the road to a weaker USD could be bumpy,” they added.
Other currencies like the Singapore dollar, Malaysian ringgit, Taiwan dollar and the Thailand baht traded between flat and 0.2% lower.
The Philippines peso was the only outlier in the region, edging 0.2% higher.
Separately, inflation data in South Korea and Philippines came in cooler than-expected even as their central banks maintained hawkish biases in the event of persistently higher price pressures in the near future.
Analysts from Barclays expect both central banks to start cutting rates by the fourth quarter of 2024, while expecting the Fed to start slashing rates by December next year.
The Bank of Korea had stood pat on its interest rates at its previous meeting last week, while the Philippines central bank is set to host its policy meeting next week.
Among Asian equities, shares in Taiwan, Philippines, South Korea and China traded between 0.6% and 0.8% lower.