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.
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.
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.
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