Asian currencies mostly moved higher on Wednesday, supported by a weaker U.S. dollar, while the Japanese yen remained steady, briefly rising after President Donald Trump announced a major trade agreement with Japan.
Investor sentiment in Japan stayed cautious, weighed down by political uncertainty following the ruling coalition’s loss in the upper house elections and increasing rumors about Prime Minister Shigeru Ishiba’s possible resignation.
Meanwhile, broader markets remained on edge ahead of Trump’s August 1 deadline for new tariffs.
The U.S. Dollar Index, which tracks the dollar’s performance against a basket of major currencies, held steady during Asian trading hours after three straight days of losses. Futures tied to the index also showed little change.
Trump-Japan Trade Deal Announced; Yen Reacts Mildly Amid Political Tensions
On Tuesday, President Trump announced that the U.S. and Japan had reached a comprehensive trade agreement, which included a reduction in tariffs on Japanese imports from 25% to 15%.
As part of the deal, Japan agreed to invest $550 billion in the U.S., and also to open its markets to American exports such as automobiles, agricultural products, and energy.
Japanese equity markets rallied on the news, but the yen’s initial gains quickly faded, reflecting unease over the country’s political future. As of 03:45 GMT, the USD/JPY pair was up 0.1%.
Citing growing dissatisfaction within the ruling Liberal Democratic Party, The Mainichi reported that Prime Minister Ishiba is expected to resign by the end of August.
Asian Currencies Steady Ahead of Tariff Decision and Fed Meeting
In China, both the onshore (USD/CNY) and offshore (USD/CNH) yuan pairs declined 0.1%, reflecting a cautious market tone.
Other regional currencies saw slight movements, with investors remaining wary ahead of the upcoming Federal Reserve interest rate decision next week.
- The South Korean won (USD/KRW) declined 0.3%
- The Singapore dollar (USD/SGD) dipped slightly
- The Australian dollar (AUD/USD) rose 0.3%
- The Indian rupee (USD/INR) edged up 0.1%
- The Malaysian ringgit (USD/MYR) fell 0.1%
