Asia FX moves little in holiday-thinned trade; Aussie upbeat after elections

Published 05/04/2025, 11:47 PM

Investing.com-- Most Asian currencies moved little in holiday-thinned trade on Monday as traders remained skittish over U.S. tariffs and a Chinese trade war, while the Australian dollar firmed after the country’s Labor party won the 2025 elections.

The U.S. dollar drifted lower, but retained some gains from last week after data showed the American labor market remained solid despite heightened trade and economic headwinds. 

Market holidays in China, Japan, and several other countries kept Asian trading volumes muted on Monday. But the Japanese yen firmed after losing ground last week, with the USDJPY pair falling 0.5%. 

The South Korean won’s USDKRW pair rose 0.1%, while the Singapore dollar’s USDSGD pair fell 0.3%. 

The Taiwan dollar was a standout performer, with the USDTWD pair sliding 3.2% amid increased optimism over the Taiwanese economy, especially following some favorable comments on U.S.-China trade, to which Taiwan is heavily exposed.

The Chinese yuan’s USDCNH offshore pair was flat, but was sitting on sharp falls in recent sessions after China signaled last week that it was open to trade talks with Washington. 

Australian dollar firms after Labor election win 

The Australian dollar’s AUDUSD pair rose 0.3% on Monday, after the Labor party nearly swept the 2025 elections over the weekend.

The Labor victory grants Prime Minister Anthony Albanese a second consecutive term- the first for an Australian PM in two decades, and will largely allow Labor to extend its policies of increased social support and government subsidies. 

This notion was seen supporting the Aussie, as were comments from Treasurer Jim Chalmers that the government will prioritize navigating U.S. trade ructions and supporting the domestic economy. 

The Labor victory also comes just weeks before a Reserve Bank of Australia meeting, where the central bank is widely expected to leave rates unchanged- a move that also presents some support for the Aussie. 

Dollar pulls back from weekly gains as tariff, economic uncertainty persists 

The dollar index and dollar index futures fell 0.3% in Asian trade, pulling back after a 0.5% rise in the prior week.

Stronger-than-expected nonfarm payrolls data had boosted the dollar on Friday, given that it showed the U.S. labor market remained strong despite trade and other economic headwinds. 

The greenback was pressured by persistent uncertainty over U.S. trade tariffs, after President Donald Trump said over the weekend that he had no immediate plans to open dialogue with his Chinese counterpart Xi Jinping. 

Trump signaled that the U.S. was preparing to sign trade agreements with several countries, and that his administration was in some dialogue with China.

Still, a U.S.-China trade deal represents the biggest point of uncertainty for markets, especially after the two became embroiled in a bitter trade war and tariff exchange through April.

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