Investing.com– Most Asian currencies were little changed on Monday, with the dollar falling sharply on rising expectations for interest rate cuts and the Japanese yen gaining on data showing an boost in average wages.

Elsewhere, the situation was stable as election results in France showed a left-wing coalition winning the most seats in parliament in the snap election, while President Emmanuel Macron’s party came second and Marine Le Pen’s far-right party came third.

Sentiment towards Asian currencies remained tense amid concerns about a potential trade war between China and the European Union. However, most regional currencies posted some gains after the dollar fell sharply over the past week amid growing optimism about U.S. interest rate cuts.

Futures and futures settled near a one-month low on Monday. This week, attention turns to a two-day statement, as well as key inflation data.

Japanese yen strengthens on mighty wage data, USDJPY falls

The Japanese yen was one of the biggest beneficiaries of the dollar’s weakness, moving away from 38-year lows despite data pointing to some strengthening in the economy.

The yen pair fell 0.2% and was well below the 162 level it nearly hit last week. Data showed Japan grew at its fastest pace in more than 30 years in May as wage increases won by unions earlier this year began to pay off.

The wage boost is brightening the outlook for consumption and inflation, and could ultimately give the Bank of Japan more leeway to raise interest rates. The BOJ has forecast higher inflation in coming years on the back of higher wages.

Still, potential government intervention remained in focus as the USDJPY pair held above 160.

China’s Yuan Is Fragile, Trade Tensions Continue

The Chinese yuan was little changed on Monday, staying just below a seven-month high as sentiment towards China remained delicate.

The EU on Friday moved to impose tough import tariffs on Chinese electric vehicles, despite objections from Beijing. Chinese officials also raised the issue of a trade war.

The move bodes ill for China, especially as the country struggles to sustain a sluggish economic recovery. The yuan has also been hurt by growing doubts about the Chinese economy after a series of mixed data prints.

This week we focus on China and additional news on the economy.

Broader Asian currencies traded in a narrow range. The Australian dollar rose 0.1% as data showed activity in the country unexpectedly slowed in May.

The Singapore dollar and South Korean won pair changed little.

The Indian rupee fell slightly but remained steady at around $83.