On Monday, much of Asia was on holiday, leaving currencies in limbo as traders prepared for a busy week of central bank meetings that would provide the latest rate rise direction across continents.
Singapore, Hong Kong, and mainland China’s Labour Day vacations slowed forex trading. Asia has only three centers: Japan, Australia, and New Zealand.
On Monday, the yen fell 0.2% to 136.67 per dollar. The yen fell 1.7% on Friday as the BOJ maintained its monetary stance.
The Australian dollar fell 0.1% to $0.6610 on Monday. Last week, the currency fell 1.1% to $0.6573, a seven-week low, but found strong support at $0.6564, the March trough.
New Zealand’s dollar fell 0.3% to $0.6172, reversing last week’s remarkable rise.
The Reserve Bank of New Zealand is expected to hike rates again this month, which boosted the Kiwi 2.3% against the yen on Friday.
The unexpected drop in China’s industrial activity in April and the weekend news that U.S. banks, including JPMorgan Chase & Co (JPM.N), were bidding for First Republic Bank (FRC.N) weighed on risk sentiment on Monday.
The Reserve Bank of Australia is expected to extend a rate hold on Tuesday, the Federal Reserve to raise rates by 25 basis points on Wednesday, and the European Central Bank to surprise with a half-point hike on Thursday.
After a quarter-point hike on Wednesday, Goldman Sachs expects a Fed pause in June.
“The focus will be on revisions to the forward guidance in its statement,” Goldman analysts told clients.
“Beyond May, we expect the FOMC to hold rates steady for the rest of the year, though several paths are possible, with much depending on how severely bank stress affects the economy.”
Australia’s government bonds climbed on Monday, following global peers.
Three-year rates fell 12 basis points but recovered to 3.001%, while 10-year yields fell five bps to 3.335%.
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