- Dollar slips as Taiwan dollar jumps to 2-year high
- Talk Asian currencies may rise to win US trade concessions
- Fed seen on hold this week, less chance of June cut
- Soft Swiss inflation supports bets on a return to sub zero rates
SYDNEY/LONDON, May 5 (Reuters) - The dollar slipped anew on Monday as a meteoric surge in its Taiwanese counterpart stoked speculation some Asian countries were prepared to engineer revaluations of their currencies to win U.S. trade concessions.
Asia-Pacific currencies were the major developed market beneficiaries of the fallout from that, and the dollar was down 0.44% on the Japanese yen at 144.3. The Australian dollar hit a five-month high in early trade, and was last up 0.4% at 0.6473.
More dramatically, the dollar slid over 3% against the Taiwan dollar to 29.772 , adding to a record 4.4% move on Friday. That brings the Asian currency to near three-year highs.
While Taiwan's central bank has denied the White House was pressing for a rise in some Asian currencies as part of a trade deal, markets were sensing a shift anyway.
"The Taiwan dollar is appreciating at a faster pace than I've ever seen," said one senior Taiwanese financial industry executive, speaking to Reuters on condition of anonymity as they were not authorised to speak to the media.
"Hot money is coming into Taiwan, and the central bank is allowing it," they added. "Many are saying that's due to pressure from the U.S.. I would say that must be the case."
China's yuan traded offshore hit its highest in almost six months at 7.1879 per dollar as investors wagered Beijing might let its currency strengthen as part of Sino-U.S. trade talks.
However, negotiations still seemed distant and the currency was last at 7.2043 per dollar.
While the Chinese Commerce Ministry has indicated Beijing was evaluating an offer from Washington to hold talks over Trump's 145% tariffs, the two sides still seem far apart.
In a TV interview aired on Sunday, President Donald Trump reiterated that he believed China wanted to do a deal, but offered no details or timeline.
Trump did say he would not attempt to remove Federal Reserve Chair Jerome Powell, but also repeated calls for lower interest rates and called Powell a "stiff".
The Fed meets on Wednesday and is widely expected to leave rates steady following a solid March payrolls report.
Markets now imply only a 37% chance of a Fed cut in June, down from 64% a month ago. Goldman Sachs and Barclays both shifted their cut calls to July from June.
Yet it was notable the dollar only got a limited lift from the jobs data and was struggling to keep the gains.
The next hurdle for the U.S. currency will be the ISM survey of services due later on Monday, with the risk a weak reading could revive worries about an economic downturn.
Things were a little calmer in Europe, where the euro was up 0.2% at $1.1232 and the pound was up 0.17% at $1.3288.
Sterling's major test this week will be a Bank of England meeting on Thursday where it is widely expected to cut rates by a further 25 basis points to 4.25%. The question is whether policymakers signal faster easing ahead.
Central banks in Norway and Sweden also meet this week and are expected to keep rates steady.
The Swiss franc was little moved by data showing Swiss inflation fell to its lowest level in four years in April. Markets see it as almost certain the Swiss National Bank will cut interest rates again next month, and expect a return to sub-zero borrowing costs later in the year.
The franc was steady at 0.8261 per dollar and a fraction softer at 0.9361 per euro.
Reporting by Wayne Cole and Alun John. Editing by Sonali Paul and Mark Potter
Source: Reuters