Asian Currencies Steady as Markets Weigh Trump’s Tariff Moves and Fed Outlook
Most Asian currencies saw minimal movement on Thursday as traders digested new U.S. trade tariffs announced by President Donald Trump, alongside lingering uncertainty over the Federal Reserve’s interest rate trajectory.
The U.S. Dollar Index, which tracks the dollar against a basket of major currencies, slipped 0.1% during Asian trading hours, continuing a mild downward trend. Futures for the index were down 0.2%.
Trump Targets Copper and Brazil in Latest Tariff Actions
On Wednesday, Trump revealed a 50% tariff on copper imports, set to take effect on August 1, citing a need to support the domestic copper industry.
Earlier in the day, he also raised reciprocal tariffs on Brazilian imports from 10% to 50%, prompting Brazilian President Luiz Inácio Lula da Silva to warn of retaliatory measures.
The announcements are part of a broader tariff push, with Trump issuing formal notices to key trade partners this week. Additional 25% duties have already been declared on imports from countries including South Korea and Japan.
Although the immediate market reaction has been muted, investors remain cautious about the possibility of further trade tensions escalating.
Currency movements reflected this caution:
- The South Korean won (USD/KRW) slipped 0.1%
- The Japanese yen (USD/JPY) held steady
- Both the onshore and offshore Chinese yuan (USD/CNY and USD/CNH) were flat
- The Singapore dollar (USD/SGD) showed little change
- The Indian rupee (USD/INR) edged down 0.1%
- The Australian dollar (AUD/USD) gained 0.1%
Fed Caution Tempers July Rate Cut Hopes
According to minutes from the Fed’s June 17–18 meeting, only a few officials supported a rate cut in July, with most citing inflation concerns stemming from Trump’s trade policies. Still, a majority projected that cuts would be appropriate later in the year.
Analysts at ING noted that the dollar’s direction remains unclear due to the Fed’s cautious stance, with central bank policy continuing to dominate currency market sentiment.
They added, “While tariff actions are influencing the Fed’s thinking, markets are increasingly focused on incoming data due to the unpredictable nature of U.S. trade policy.”
