Asian currencies slip on dollar strength; regional inflation data on tap

By Roshan Thomas

July 2 (Reuters) –Most Asian currencies depreciated on Tuesday, with the Philippine peso and South Korean won leading losses amid a firmer dollar, while stocks struggled for direction as investors remained cautious ahead of regional inflation prints.

The Thai baht THB=TH, the Philippine peso PHP= and the Indonesian rupiah IDR= slipped 0.3% each.

The dollar index =USD was trading higher at 105.9 amid heightened bets of Donald Trump winning the U.S. presidency.

The South Korean won KRW=KFTC weakened 0.3% while stocks in Seoul .KS11 were set to snap a two-day winning streak with a 0.8% drop, as a rise in U.S. Treasury yields weighed on sentiment. .KS

South Korea’s consumer inflation weakened to an 11-month low in June as supply-side pressures eased, an official data showed on Tuesday.

The report came in after data on Monday showed inflation in Indonesia had eased more than expected for June.

“It is clear that inflation has moderated gradually over the past three months, as headline inflation has fallen from a recent high of 3.1% in February,” analysts at ING said in a client note.

“As a result, we believe that the Bank of Korea will shift its communication tone from hawkish to neutral from its July meeting,” they said.

Among other regional markets, Taipei stocks .TWII lost 0.7% on the back of falling U.S. chipmakers. Shares of chipmaker giant Taiwan Semiconductor Manufacturing 2330.TW dropped 0.5%.

Stocks in Bangkok .SETI slumped 0.8%, while those in India .NSEI advanced 0.4%.

Singapore stocks .STI gained as much as 0.6% to touch their highest levels in 11 months.

Investors now await inflation readings from Thailand, Taiwan and the Philippines this week to get a clearer picture of the regional price pressure.

Traders will also look for cues on rate cuts when U.S. Federal Reserve Chair Jerome Powell speaks at an event later in the day.

The U.S. Fed could afford to wait for a couple more inflation and jobs reports before considering a rate cut, said Lloyd Chan, senior currency analyst at MUFG Bank.

“So for now, with the Fed not going to do anything on the policy rate, Asian central banks will have to wait out for the time-being.”

HIGHLIGHTS:

** Indonesian 10-year benchmark yields fall to 0.3%

** Japan will remain vigilant to forex moves, finance minister says

** European Central Bank not in a hurry to cut rates further, Lagarde says

Reporting by Roshan Thomas in Bengaluru; Editing by Sherry Jacob-Phillips