Asia FX sees limited relief, dollar dips as Trump postpones Canada, Mexico tariffs

Published 02/03/2025, 10:21 PM
© Reuters.
USD/JPY
-
AUD/USD
-
USD/SGD
-
USD/INR
-
USD/KRW
-
DX
-
USD/CNH
-
DXY
-

Investing.com-- Most Asian currencies recovered mildly on Tuesday, while the dollar nursed losses after U.S. President Donald Trump postponed plans to impose trade tariffs against Canada and Mexico.

But gains in regional currencies were limited, given that Trump’s 10% tariffs against China are still set to take effect later in the day. 

Chinese markets remained closed for the Lunar New Year holiday, although the yuan clocked wild swings in offshore trade. 

Broader Asian currencies did recover a bulk of their losses from the previous session, tracking a decline in the dollar. But regional markets were still nursing losses in recent weeks, especially amid growing concerns over U.S. interest rates remaining high for longer. 

The Japanese yen’s USD/JPY pair rose 0.3% to 155.15 yen after falling sharply in overnight trade. 

The South Korean won’s USD/KRW pair was flat, while the Australian dollar’s AUD/USD pair fell 0.2%. 

The Singapore dollar’s USD/SGD pair was flat, while The Indian rupee’s USD/INR pair remained in sight of a record high above the 87 rupee level. 

Chinese yuan volatile ahead of Trump tariffs 

The yuan’s USD/CNH offshore pair steadied on Tuesday after briefly surging to an over three-week high in the prior session. The currency fell sharply from this peak after Trump postponed plans to impose 25% import duties on Canada and Mexico.

But Trump is still set to impose 10% trade tariffs on China from 00:00 ET (05:00 GMT) on Tuesday. 

The U.S. President is set to speak with Chinese President Xi Jinping as soon as this week, the White House said, potentially setting up a diplomatic deal that could avoid a greater trade war. 

The yuan was battered by concerns over a Sino-U.S. trade war akin to that seen in Trump’s first term. While his postponement of tariffs against Canada and Mexico offered markets some relief, sentiment still remained uncertain over more measures from Trump.

Dollar dips on tariff relief, payrolls anticipation limits losses 

The dollar index and dollar index futures rose 0.2% each in Asian trade, steadying from steep overnight losses.

But further declines in the dollar were stemmed by persistent concerns over high for longer U.S. interest rates, especially following strong PCE price index inflation data from last week.

The Federal Reserve has signaled that sticky inflation will give it less impetus to keep cutting interest rates, which bodes well for the dollar. Fed officials also flagged a reluctance to ease policy amid uncertainty over Trump’s policies.

Focus this week is on nonfarm payrolls data for January, due on Friday. The reading is likely to factor into expectations for interest rates. 

 

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2025 - Fusion Media Limited. All Rights Reserved.