Investing.com– Most Asian currencies kept to a tight range on Tuesday, while the dollar hovered near two-month lows as weak economic readings fed expectations of eventual interest rate cuts by the Federal Reserve.

But traders still remained wary of risk-driven Asian markets, with key U.S. labor data, due this week, set to offer more cues on interest rates. 

This kept most regional currencies in a tight range. The Japanese yen’s pair rose 0.2% after falling sharply from 157 yen on Monday. 

The Chinese yuan’s pair rose 0.1%, staying close to recent six-month highs as sentiment towards China remained weak. 

Indian rupee weakens as early vote counting shows narrow Modi victory

The Indian rupee’s pair rose 0.4% on Tuesday, reversing course after the currency firmed sharply in the prior session.

Early vote counting in the closely-watched 2024 general elections indicated that the BJP-led NDA alliance was set for a much less sweeping victory than what exit polls had signaled.

While a win still presents a rare third term for Prime Minister Narendra Modi, a slimmer victory will herald more difficulty for Modi in doling out economic reforms.

Australian dollar falls after batch of weak data 

The Australian dollar’s pair fell 0.1% after a swathe of weak economic readings set the stage for an underwhelming gross domestic product print on Wednesday.

Australia fell into a deficit in the first quarter, while to GDP also shrank 0.9% in the quarter.

Both readings indicated that could potentially underwhelm. GDP is expected to have grown 1.2% year-on-year, slowing from the 1.5% growth seen in the prior quarter. 

Dollar at 2-mth low, Sept rate cut bets grow 

The and both fell 0.1% in Asian trade, extending steep overnight losses. Both indexes were also at their weakest levels since early-April. 

The greenback sank on Monday after data showed manufacturing activity contracted for a second straight month in May.

The reading pointed to more cooling in the U.S. economy, and saw traders ratchet up bets that the Federal Reserve .

Key labor data, particularly on , is due this Friday and set to offer more cues on rates. The Fed is also set to meet next week, but is expected to keep rates on hold then. 

Among other Asian currencies, The South Korean won’s pair rose 0.3% after data showed in the country eased more than expected in May.

The Singapore dollar’s pair rose 0.1%.