Dollar Continues Weakening In Asia, Investors Await Key US Inflation Measures

JAKARTA - The US dollar continued to weaken in Asian trade on Tuesday morning, as investors awaited US inflation data due this week after weaker-than-expected jobs data snuffed out expectations of an early reduction in Federal Reserve (Fed) stimulus.

The euro was quoted at 1.21915. the dollar, bouncing back from a three-week low of 1.2104 dollars set on Friday, June 4, while the dollar weakened to 109.26 yen, losing ground after hitting a two-month high of 110.325 late last week.

A basket of six major rivals stood at 90.021, not far from 89.533, a 4.5-month low touched late last month.

"It's not because the payroll figures are weak. But because so many expectations have been built in advance, the dollar has suffered a bit of a pullback", Barclays Senior Currency Strategist, Shinichiro Kadota, reported by Antara.

Jobs data on Friday, June 4 showing payroll figures for the US non-farms increased by 559.000 in May, 90.000 jobs lower than expected.

The data helped put US Treasury bond yields near recent lows, weighing on the dollar, while investors now look to Thursday, June 10 consumer price data for a new direction.

Many investors now expect the Fed to unveil plans to reduce bond purchases later this year, and the actual reduction to begin early next year.

The British pound was barely moving at 1.4169 dollars, while the Australian dollar was unchanged at 0.7753 dollars. The US, both stuck in the range seen over the past few months.

With trading ranges tight recently, implied volatility in both currencies has dropped to the lowest levels since early 2020, before markets were hit by the COVID-19 pandemic.

In other places, the Mexican peso was holding at 19.832 against the US dollar, near its highest level since late January, after the election timeframe confirmed President Andres Manuel Lopez Obrador's MORENA party as the strongest party in the country, but with a dwindling majority.

By contrast, the Peruvian sol fell to an all-time low of 3.9367 per dollar as socialist Pedro Castillo edged ahead of far-right rivals. Keiko Fujimori in the country's presidential election.

Cryptocurrencies are also slightly moved. Bitcoin is trading flat at USD 33.564, while Ether is at USD 2.581.