Asian currencies experienced modest appreciation on Monday, driven by a softer U.S. dollar as anticipation surrounding pivotal trade discussions between the U.S. and China rose. While the Chinese yuan remained stable following disappointing economic reports, other regional currencies recorded slight improvements, indicating cautious optimism.

Dollar Weakens as Market Awaits Policy Signals

The U.S. Dollar Index dipped by 0.2% during Asian trading hours, retracing Friday’s rally prompted by a positive U.S. jobs report. However, Dollar Index futures stayed elevated, suggesting potential volatility prior to significant events.

Investors are closely examining the U.S.-China trade discussions occurring in London, where Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and Trade Representative Jamieson Greer are set to meet China’s Vice Premier He Lifeng.

This dialogue represents an effort to advance the tentative trade truce established in Geneva last month with a focus on:

• Tariff reductions

• Export restrictions regarding semiconductors and rare earth materials

• A structured approach for broader trade collaboration

Regional Currency Performances

Although hopes for enhanced geopolitical stability support sentiment, most traders opted for caution ahead of established results and the forthcoming U.S. CPI inflation report later this week.

Key Currency Performances:

• USD/SGD (Singapore dollar): down 0.2%
• USD/INR (Indian rupee): down 0.2%
• USD/KRW (South Korean won): down 0.2%
• AUD/USD (Australian dollar): up 0.3%
• USD/CNY (Chinese yuan): stable, following weak inflation and export data

Outlook

As global macro indicators come into focus, traders are balancing potential trade resolutions against risks linked to inflation and interest rates. The upcoming U.S. Consumer Price Index (CPI) report is likely to heavily influence Fed rate expectations and risk sentiment.