Asian currencies traded within narrow ranges on Monday as investors balanced a tentative easing in US-Iran tensions against a busy week of economic releases across the region.
Meanwhile, the New Zealand dollar remained on course for its steepest monthly decline in almost two years.
Asian Currency Markets Remain Cautious
Market sentiment stayed cautious after the United States and Iran exchanged fresh strikes over the weekend.
The two countries later agreed to pause further retaliatory attacks and hold talks in Qatar on Tuesday.
The development provided limited support for risk sentiment. However, uncertainty surrounding the durability of the ceasefire and the wider Middle East outlook remained high.
Major Asian Economic Data Ahead
Investors are also preparing for a packed regional economic calendar.
China is due to publish manufacturing activity data, while South Korea will release trade and industrial production figures.
Markets will also assess Japan’s Tankan business survey and purchasing managers’ index readings.
Indonesia’s inflation report and India’s industrial production data are also due this week.
These releases could influence expectations for interest-rate decisions and monetary policy across Asia.
New Zealand Dollar Heads for Sharp Monthly Loss
The New Zealand dollar traded near $0.564 against the US dollar.
The NZD/USD pair was down approximately 5.9% for June and remained on track for its largest monthly decline since 2024.
Earlier expectations that the Reserve Bank of New Zealand would need to tighten monetary policy aggressively have weakened in recent weeks.
Those expectations had been driven by concerns that higher energy prices would push inflation higher.
Lower Oil Prices Ease New Zealand Inflation Concerns
Oil prices have fallen following the tentative ceasefire between the United States and Iran.
The decline has reduced immediate concerns about energy-driven inflation in New Zealand.
However, investors remain cautious about the longer-term economic impact of the earlier energy-price shock.
Continued strength in the US dollar has also placed additional pressure on the New Zealand currency.
Australian Dollar Remains Under Pressure
The Australian dollar also struggled, with AUD/USD trading near $0.689.
The currency was heading for a monthly decline of more than 4%.
Traders are assessing Australia’s economic growth outlook ahead of comments from Reserve Bank of Australia officials later this week.
Any signals about inflation, economic activity or future interest-rate policy could influence the Australian dollar.
China Manufacturing Data in Focus
Investors are watching China for further signs that the world’s second-largest economy is stabilising.
Official manufacturing PMI data is expected to return to expansion territory.
Markets will also examine industrial profit figures and the People’s Bank of China’s new overnight reverse-repurchase operation for clues about future monetary policy.
The offshore Chinese yuan was little changed near 6.80 per US dollar after recording modest losses during the previous week.
US Dollar Set for Strong Monthly Gain
The US dollar was broadly unchanged during Asian trading.
The US Dollar Index traded near 101.4 and was on course to gain approximately 2.5% in June.
That would represent its strongest monthly performance since July of the previous year.
Resilient US economic data and continued demand for safe-haven assets have supported the dollar.
South Korea Exports Could Rebound
South Korea’s upcoming export and industrial production figures are expected to highlight continued strength in semiconductor demand.
ANZ economists forecast a sharp recovery in exports and factory output following temporary weakness earlier in the quarter.
South Korean inflation is also expected to accelerate as higher energy costs continue to affect consumer prices.
The won traded broadly unchanged at approximately 1,545.8 per US dollar.
Japan Tankan Survey Takes Centre Stage
In Japan, investors will closely monitor the Bank of Japan’s quarterly Tankan business survey.
Business confidence is expected to improve despite recent disruption caused by higher energy prices.
Manufacturing and services PMI readings will also be examined for signs that economic activity is gaining momentum ahead of the third quarter.
The Japanese yen was little changed at around 161.75 per US dollar.
Asian FX Outlook Depends on Data and Geopolitics
Asian currency markets are likely to remain sensitive to both geopolitical developments and regional economic data.
A lasting US-Iran ceasefire could reduce demand for safe-haven currencies and ease energy-related inflation concerns.
However, stronger US economic data and uncertainty over Asian monetary policy could continue to support the dollar and limit gains across regional currencies.
