Yuan rebounds, yen retreats and greenback softens

The yuan yesterday rebounded to a new one-and-a-half month high yesterday but the Japanese yen retreated, while the US dollar softened on weaker-than-expected domestic job data.

The onshore yuan ended at 7.2137 per greenback yesterday, 279 basis points higher than the previous close before the five-day holiday.

The greenback was a touch lower yesterday as a soft jobs report on Friday boosted wagers that the Federal Reserve may still cut rates multiple times this year.

Traders bet the interest rate decreases to start earlier in September but the number of cuts for the whole year remained at two at most, according to OCBC Bank's economist Cindy Keung.

But the greenback is expected to rebound soon, as the US Fed's rate cut path stays cloudy.

Meanwhile, the Japanese yen slid 0.5 percent to 153.74 per US dollar in Asian trading, wiping out its advance in the last session.

On Friday, the yen spiked to touch a level unseen in three weeks.

The dollar-yen is likely to move higher and retest the 160 level given the "tremendously wide" US-Japan rate differentials, Alvin Tan, head of Asia FX strategy at RBC Capital Markets in Singapore said on Bloomberg TV. "The impact of the interventions will dissipate quite quickly if indeed US interest rates do not continue to drop from here."

To stem yen losses, the Ministry of Finance has probably bought the currency twice in late April and early May, spending about 9 trillion yen (HK$458 billion) in total, according to Bloomberg calculations. The yen still remains the worst-performing major currency so far this year with a loss of more than 8 percent against the dollar.