Most Asian currencies firmed on Monday as softer-than-expected U.S. inflation readings pushed up hopes that the Federal Reserve will taper its hawkish stance, with focus also turning to more U.S. economic cues this week.

The U.S. dollar steadied after a drop on Friday, as the personal consumption expenditures price index- the Fed's preferred inflation gauge- read softer than expected for May.

The dollar index and dollar index futures traded sideways in Asian trade after losing about 0.4% each on Friday.

Losses in the dollar benefited most Asian units, although gains were limited following mixed economic readings from the region's biggest economies. Markets are also still positioning for a Fed rate hike later in July.

The Australian dollar moved little on Monday, amid some uncertainty over whether the Reserve Bank will hike rates on Tuesday.

While overall Australian inflation eased in May, core inflation still remained elevated and above the RBA's target range, which fed expectations that the bank may yet need to hike rates further. Analysts are split over a 25 basis point hike this week.

Other data on Monday also pointed to more cooling in the Australian economy, with manufacturing activity shrinking further in June.

But despite Monday's gains, most Asian currencies were still trading substantially weaker for the year, amid continued pressure from rising U.S. interest rates.

Data this week is expected to provide more cues on the world's largest economy, with the minutes of the Fed's June meeting due on Wednesday.

Nonfarm payrolls data- a key labor market gauge watched by the Fed- is also due on Friday, and is largely expected to factor into U.S. monetary policy.

Source: Investing.com