Investing.com -- Most Asian currencies moved in a flat-to-low range on Tuesday, while the dollar crept higher as markets awaited more cues on negotiations between U.S. lawmakers over raising the debt ceiling and avoiding a default.
China’s yuan fell 0.2% and was trading near a six-month low to the dollar amid continued uncertainty over a slowing economic rebound in the country. The currency has been on a losing streak after it crossed the key 7 level against the dollar last week.
Markets were also wary of any worsening in U.S.-China ties after Beijing failed U.S. chipmaker Micron (NASDAQ:MU) in a security review, blocking sales by the firm in China.
The Thai baht fell 0.5% to a five-week low, and was the worst-performing Asian currency on Tuesday as markets awaited more cues on the formation of a government in the Southeast Asian country.
The country’s pro-democracy opposition party had unexpectedly defeated the military-backed junta in elections last week.
Broader Asian markets were somewhat mixed. The Japanese yen rose 0.1% after data showed that the country’s manufacturing sector unexpectedly grew in May, while growth in services hit a record high.
But the yen was trading at a six-month low to the dollar, as it faced increased pressure from a dovish outlook for the Bank of Japan.
The South Korean won rose 0.3%, aided by stronger-than-expected consumer confidence data for May. Focus this week is also on a Bank of Korea interest rate decision, where the lender is expected to keep rates steady.
The Australian dollar was flat as positive purchasing managers index data pointed to some resilience in the economy.
The U.S. dollar advanced slightly against a basket of currencies, with the dollar index and dollar index futures trading higher after a muted overnight session.
Continued negotiations between Democrat and Republican lawmakers failed to result in a deal to raise the debt ceiling, although both parties expressed some optimism over avoiding a U.S. default.
This comes ahead of a June deadline for a U.S. default, the prospect of which has rattled global markets in recent weeks. But the dollar saw increased demand, which helped it rebound from recent one-year lows.
Recent speculation that the Federal Reserve will keep rates higher for longer has also benefited the dollar, even as markets broadly positioned for a pause in the Fed’s rate hike cycle next month. Focus this week is also on the minutes of the Fed’s May meeting for more cues on policy.