Most Asian currencies kept to a tight range on Tuesday as traders grappled with renewed U.S.-China trade tensions, while the dollar steadied before an address by Federal Reserve Chair Jerome Powell.
Asian currencies were nursing steep losses from the prior session, while the dollar stood strong after U.S. President Donald Trump threatened 100% tariffs against China, drawing a sharp rebuke from Beijing.
While Chinese and U.S. officials attempted to soothe some tensions, markets remained largely on edge over more trade hostilities between the world’s largest economies.
The Chinese yuan weakened on this trend, with the USD/CNY pair rising 0.1%. China’s Ministry of Commerce warned that it will “fight to the end” in any trade war with the United States.
Trade data released on Monday showed China’s massive exports were so far facing limited headwinds from high U.S. tariffs, which stood at about 50%. The country was also seen diverting U.S.-bound exports to other Asian and European countries.
Among other Asian currencies, the Japanese yen’s USD/JPY pair fell slightly, with the yen remaining weak on expectations of more fiscal spending under upcoming Prime Minister Sane Takaichi.
But Takaichi– who was recently elected as the leader of the ruling Liberal Democratic Party– faced a snag in her potential prime ministership after a major coalition partner withdrew their support.
The South Korean won’s USD/KRW pair moved little, while the Australian dollar’s AUD/USD pair fell 0.3%. The Indian rupee’s USD/INR pair remained pinned above 88 rupees, with softer-than-expected consumer inflation data for September drumming up bets on more rate cuts by the Reserve Bank.
Dollar inches lower with Powell speech in focus The dollar index and dollar index futures fell about 0.1% each in Asian trade, steadying after logging some gains in recent sessions. Uncertainty over the U.S. economy and fears of a trade war drove some safe haven flows into the greenback.
An ongoing U.S. government shutdown kept traders largely in the dark over the U.S. economy, with focus now turning to upcoming addresses from Fed Chair Powell and other central bankers for more cues.
Markets were grappling with a lack of government data on the labor market and inflation, which was delayed indefinitely due to the shutdown. Political deadlock in Congress, over the shutdown, also showed few signs of clearing.
Powell is set to speak at an annual meeting of the National Association for Business Economics. His address comes just weeks before the Fed’s late-October meeting, where the central bank is expected to cut rates by 25 basis points again.
Singapore dollar steady after strong GDP, MAS hold The Singapore dollar’s USD/SGD pair moved little on Tuesday after gross domestic product data showed the island state’s economy grew more than expected in the third quarter.
The Monetary Authority of Singapore also left its monetary setting unchanged on Tuesday, citing resilient growth and a less dire impact from Trump’s trade tariffs than the central bank was fearing.
