Asian FX Muted as Markets Weigh Trump Tariffs, Dollar Moves Above 1-Week Low By Investing.com
Investing.com – Most Asian currencies were in a narrow range on Tuesday as traders weighed the potential for less stringent trade tariffs under US President-elect Donald Trump, while the dollar steadied after some overnight losses.
China’s yuan continued to lag seriously behind its peers after its mainland pair hit a 17-year low on Monday. While the currency has recovered somewhat, it remains fragile, with new US restrictions against Chinese companies putting further pressure on the currency.
The dollar also steadied after recouping most of its overnight losses, as a recent report fueled heightened speculation about what Trump’s tariff plans would include.
The Japanese yen rose 0.4% to hit its highest level in nearly six months, while the Australian dollar gained 0.2%. Australian data for November is due on Wednesday.
The South Korean won fell slightly, while the Indian rupee pair steadied after a sharp recovery from record highs above 86 rupees.
The dollar is steady above a one-week low amid speculation about tariffs
And they rose slightly in Asian trade, recovering from Monday’s one-week low.
The dollar recouped most of its losses since Monday after Trump denied a Washington Post report that his administration would impose less stringent trade tariffs than originally promised.
Trump – who is due to take office in less than two weeks – has vowed to impose steep import tariffs against China and other major economies, raising concerns about a renewed global trade war.
The prospect of more tariffs was a key driver of the dollar’s recent rally, as was growing confidence that the Federal Reserve will cut interest rates at a slower pace in 2025. Hawkish comments from Fed officials deepened this idea over the weekend.
This week’s focus is now on key data for December, due on Friday, for more indicators on the US economy and labor market.
China’s yuan is fragile amid US trade jitters
The Chinese yuan was the worst performing Asian currency this week, after hitting a 17-year low on Monday.
The onshore yuan rose 0.3% on Tuesday, with the Chinese currency remaining fragile on the prospect of further US trade problems.
The US on Tuesday added tech giants Tencent Holdings Ltd (HK: ) and Contemporary Amperex Technology (SZ: ) to a blacklist of companies with ties to China’s military, threatening to further strain ties between the world’s biggest economies.
Beijing is expected to issue more stimulus measures in the face of a renewed trade war with the US
The focus this week is on , due on Thursday, for more clues on Asia’s biggest economy as it struggles to sustain growth.
