The offshore yuan held its recent advance around 7.12 per dollar on Tuesday, after three straight sessions of gains, supported by weakness in the US dollar. The greenback continued to struggle as mounting concerns over a cooling labor market fueled expectations of Federal Reserve rate cuts. Traders are now pricing in an 89% chance of a 25 bps cut at next week’s meeting, with some even positioning for a larger 50 bps reduction. Domestically, the yuan came under pressure after recent data showed China’s trade performance weakened in August, with exports slowing to six-month low and softer-than-expected imports adding pressure on growth. Meanwhile, China is pressing ASEAN to finalize an upgraded free trade pact by year-end to boost exports and counter US tariffs, highlighting its push for greater market access and multilateral cooperation. Looking ahead, market attention turns to key data this week, including August consumer prices, which are expected to reignite deflationary concerns.

The New Zealand dollar rose to around $0.595 on Tuesday, advancing for the third straight session to approach a four-week high, supported by a softer US dollar. The greenback remained under pressure amid rising expectations of deeper US rate cuts, following further signs of a weakening labor market. Fed funds futures are currently pricing in nearly a 90% chance of a 25 bps cut this month, with some traders also factoring in the possibility of a larger 50 bps move. Domestically, the Kiwi faced pressure from expectations of further monetary easing by the Reserve Bank. A sharp decline in second-quarter sales across multiple industries underscored growth risks and strengthened bets on another rate cut at the RBNZ’s October meeting, following last month’s cash rate reduction and guidance for more easing ahead. Elsewhere, subdued export data from China added downside on the export-reliant currency, given New Zealand’s close trade ties with Beijing.

The South Korean won rose to around 1,385 per dollar on Tuesday, reversing losses from the previous session due largely to the dollar's weakness. Signs of a cooling US labor market strengthened Fed cut bets, pressuring the dollar and supporting Asian currencies. Domestically, sentiment was tempered after Seoul expressed deep regret over a US immigration raid at a Hyundai–LG battery plant, raising concerns about diplomatic friction for Korean firms in the US. Authorities pledged to safeguard corporate interests abroad, though investors remained cautious as the issue highlighted vulnerabilities in cross-border investment ties. At the same time, policymakers continued discussions with Washington on tariffs and investment rules, underscoring Seoul’s effort to safeguard national interests in trade negotiations. Markets also awaited key US inflation reports later this week that could guide the Fed’s policy outlook and the broader dollar direction.