Emerging Asian currencies edge up as dollar sinks; yuan heads for third straight monthly gain

Most emerging Asian currencies inched higher on Monday as U.S. political woes and lukewarm economic data pushed the dollar to multi-year lows and dampened expectations of another Federal Reserve rate hike this year.

Data on Friday showed growth in the world`s largest economy picked up in the second quarter, but labour costs rose less than expected, stoking concerns that inflation will remain low.

Hopes that the Trump administration will be able to push through tax reforms and economic stimulus in the near future, which are seen as dollar-positive factors, also faded after the U.S. Senate on Friday failed to dismantle Obamacare.

"USD softness failed to find any respite, as markets are more concerned over subdued U.S. price and wage pressures, which are raising doubts over further Fed rate hikes for the rest of the year." Mizuho Bank said in a research note.

Rising U.S. interest rates usually reduce the appeal of higher returns from Asia and could spur capital outflows from the region.

In Asia,the perceived safe-haven Japanese yen strengthened, hitting a near seven week high against the greeback.

The Thai Baht and Singapore dollar were headed for their third straight month of gains, while Philippine peso was on track for its second consecutive monthly loss.YUAN

China`s yuan firmed in the spot market and was on track for its third straight month of gains after The People`s Bank of China set the yuan midpoint at its highest level in over nine months, reflecting weakness in the greenback.

Traders largely shrugged off an official survey that showed growth in China`s manufacturing sector cooled slightly more than expected in July, as the headline reading still remained solid.

While China`s foreign trade faces a mostly positive environment in the second half of the year, uncertainties still exist, Vice Commerce Minister Qian Keming said in Beijing on Monday.TAIWAN DOLLAR

The Taiwan dollar rose and was headed for a monthly gain after data on Friday showed solid economic growth in the second quarter.SOUTH KOREAN WON

The won hit an over one-week low before reecovering to trade steady, as concerns stemming from renewed political tensions with North Korea kept sentiment in check.

North Korea said it conducted another successful test of an intercontinental ballistic missiles (ICBM) on Friday that proved its ability to strike America`s mainland, drawing a sharp warning from U.S. President Donald Trump.

"Despite South Korea’s solid fundamentals, the KRW remains susceptible to external uncertainty including geopolitical tensions on the Peninsula in our view." Scotiabank said in a note.

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)