Asian Currencies Dip on Mixed Chinese Trade Data, Fed Rate Risks

By Ambar Warrick

Investing.com-- Most Asian currencies fell on Monday after mixed Chinese trade data raised concerns over demand in the country, while the dollar strengthened on expectations that the Federal Reserve will hike rates at a sharp clip next month.

As of 2302 ET (0302 GMT), the Chinese yuan was largely muted at 6.7620, as investors weighed robust exports against a smaller-than-expected rise in Chinese imports.

While China’s trade balance surged to a record high in July, a smaller-than-expected rise in imports raised concerns over sluggish demand in the country, which is a major export destination for most of Asia.

Currencies of countries with high trade exposure to China retreated on the data. The Philippine peso lost 0.1%, while Indonesia’s rupiah fell 0.3%.

The Chinese data comes just as the country begins rolling back crippling COVID-related lockdowns. The lockdowns had severely dented Chinese economic growth, which caused a knock-on effect across Asia. This has also seen Chinese inflation lag the large spikes seen across the globe, with a reading on Wednesday set to further the trend.

The Australian dollar rose 0.3% to 0.69 to the dollar as data showed that despite sluggish imports, China’s appetite for industrial metals- Australia’s top export to the country- remained steady. Australia had recently logged a record trade surplus on strong commodity exports to China.

Elsewhere, the Japanese yen fell 0.3% against the greenback to 135.34, and was the worst performer among its peers in Asia.

Japan logged its first current account deficit in five months in June, as rising commodity prices saw the value of imports largely eclipse exports.

The yen, along with most other currencies, was also pressured by expectations that the Fed will hike interest rates sharply when it meets in September. The dollar index jumped 0.9% on Friday, as did dollar index futures.

Stronger-than-expected U.S. payrolls data last week has bolstered this notion. With U.S. wages also rising at a steady pace, investors fear that the Fed could be pushed into hiking rates more than expected, to stave off inflationary pressures.

Focus is now also on the upcoming U.S. CPI inflation data on Wednesday, which is likely to factor into the Fed’s stance on interest rates.

Begin trading today! Create an account by completing our form

Privacy Notice

At One Financial Markets we are committed to safeguarding your privacy.

Please see our Privacy Policy for details about what information is collected from you and why it is collected. We do not sell your information or use it other than as described in the Policy.

Please note that it is in our legitimate business interest to send you certain marketing emails from time to time. However, if you would prefer not to receive these you can opt-out by ticking the box below.

Alternatively, you can use the unsubscribe link at the bottom of the Demo account confirmation email or any subsequent emails we send.

By completing the form and downloading the platform you agree with the use of your personal information as detailed in the Policy.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 81.6% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Back to top

Office network
  • London Office
    One Financial Markets 

    1 Finsbury Market
    London
    EC2A 2BN
    United Kingdom


    T:  + 44 ( 0 ) 203 857 2000
    E:  info@ofmarkets.com
  • Dubai Office
    One Financial Markets 
    OT19-39 Central Park Tower
    Dubai International Finance Centre
    Dubai
    United Arab Emirates
     
    T: + 00 971 44 22 888
    E:  info@ofmarkets.com
     

One Financial Markets is the trading name of Axi Financial Services (UK) Ltd, a company registered in England with company number 6050593. Axi Financial Services Ltd is authorised and regulated by the Financial Conduct Authority in the UK (under firm reference number 466201) and the Financial Sector Conduct Authority in South Africa (with FSP number 45784).

The information on this site is not directed at residents of the United States, Belgium, Poland or any particular country outside the UK and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

www.onefinancialmarkets.com is owned and operated by Axi Financial Services (UK) Ltd.

Award winning broker
We have been presented with a number of awards that recognise the quality of our service and dedication to our clients :

Best FSA Regulated Broker
Saudi Money Expo

Best Education Product
Saudi Money Expo

Best Broker - Online Trading
IAIR Awards

Best Institutional Broker
Saudi Money Expo

Best FX Services Broker
CN Forex

Top International
FX Broker 2015

Saudi Money Expo

Broker of the Year
Online Trading – Middle East

IAIR Awards

Best Forex
Customer Service 2018

JFEX Awards

We accept the following payment methods: