From Investing.com:

Most Asian currencies fell on Tuesday due to weak Chinese economic readings, while the dollar steadied in anticipation of key U.S. data. An earthquake in central Japan also rattled markets, causing the yen to fall in slim trading volumes. The Chinese yuan was among the worst performers, falling 0.4% as poor PMI data showed further deterioration in China’s manufacturing sector.

The official PMI data showed little sign of recovery in Chinese economic activity at the end of 2023, with growth still remaining modest and employment and inflation failing to pick up substantially. The PBOC set a slightly stronger daily fix for the yuan following the dismal data, but this only slightly stemmed losses in the currency. The weakening yuan has caused sentiment towards broader Asian markets to sour, given China’s status as a major trading hub for the region.

The U.S. dollar crept higher in Asian trade after a bruising 2023, with traders pricing in over a 70% chance for a 25 basis point rate cut in March 2024. Markets expect the nonfarm payrolls data for December to factor into the monetary policy, as the labor market remains relatively hotter than what the Fed is comfortable with. Inflation also remains well above the central bank’s 2% annual target, despite cooling sharply through 2023. Fed officials have warned that bets on early interest rate cuts are overly optimistic.



Read more: Asia FX slips on weak China PMIs; dollar steadies before more cues By Investing.com