Asian currencies thrive as downbeat US jobs data hurts dollar

SHANGHAI: Asian currencies were broadly firmer as the dollar languished near a seven-month low on Monday after disappointing U.S. jobs growth in May raised doubts over the number of Federal Reserve interest rate hikes this year.
The dollar index hit its lowest level since the November presidential election, after U.S. nonfarm payrolls sharply undershot a Reuters' poll forecast.
While many analysts are certain about a rate hike this month, they expect a more dovish course for the second half of this year.
"Doubts about the Fed's conviction about tightening trajectory were triggered by NFP (nonfarm payrolls) disappointment, triggering UST yield slump and softer USD," Vishnu Varathan, head of economics and strategy at Mizuho Bank's Treasury, said in a research note. Strong equities and foreign inflows propelled the Philippine peso and the Malaysian ringgit to a more than quarter percent rise for each. Foreign investors have been net buyers in Malaysian stocks for 17 consecutive weeks, while they were net buyers in Philippine stocks on each trading day of the last week.
Malaysia's fifth-straight month of double-digit growth in exports also pushed the ringgit to its highest since Nov. 10.
The People's Bank of China's (PBOC) firmer setting of the midpoint rate in nearly 7 months and a strong services sector activity survey contributed to the yuan's rise on the day.
The PBOC took markets by surprise last week when it announced it would add an as-yet undefined "counter-cyclical" factor to its daily reference point calculations to overcome depreciation expectations.
The Thai baht was the top performer of the day with more than a half percent rise, ahead of a central bank news conference on foreing exchange regulation reforms on Monday.
This week marks three major global events - UK national elections, a policy meeting of the European Central Bank, and former FBI Director James Comey's testimony to the Senate.
Analysts expect these events to bring some risks to the region. "If the election impacts global market sentiment, it will move Asian markets. Asian currencies could shed in response to headlines," said Gao Qi, an FX Strategist at Scotiabank.  
However the effects could be favourable for the regional currencies, if the ECB continues with its dovish tone on Thursday, analysts said. "We expect (ECB chief Mario) Draghi to underscore that it is too early to pare back monetary accommodation, and thus capital inflows to AXJ markets could sustain, buoying AXJ  currencies" said Varathan of Mizuho Bank.
The Thai baht edged up 0.63 percent to 34.045 per dollar. The rise comes ahead of its news conference on foreign exchange regulation reforms on Monday, as policymakers remain focused on tamping down on a strong baht.