Asian Currencies Steady Ahead of Fed and BOJ Rate Decisions; US-China Talks in Focus
Most Asian currencies remained flat on Monday as markets braced for a busy week. Key events include interest rate decisions from the U.S. Federal Reserve and the Bank of Japan, renewed U.S.–China trade talks, and an approaching tariff deadline set by President Donald Trump.
The U.S. Dollar Index dipped 0.1% during Asian trading hours. Futures tied to the index remained mostly unchanged.
Asia FX Holds Steady Despite US-EU Trade Deal Optimism
President Trump announced a new U.S.–EU trade deal on Sunday. The agreement imposes a 15% tariff on European goods entering the U.S., lower than the previously proposed 30% rate.
Meanwhile, high-level U.S. and Chinese officials are meeting in Stockholm on Monday. Their goal is to ease trade tensions and potentially extend the current tariff truce by another three months.
According to the South China Morning Post, both sides are expected to avoid imposing new tariffs before the August 12 deadline, aiming to prevent further escalation.
Despite improving global trade sentiment, many traders remained cautious. Markets are still watching the August 1 deadline, which could trigger higher tariffs if no deal is reached in time.
In currency markets:
- USD/CNY and USD/CNH yuan pairs traded flat.
- The Singapore dollar (USD/SGD) and Indian rupee (USD/INR) also saw little movement.
- The Australian dollar (AUD/USD) dipped 0.1%.
- The South Korean won rebounded, with USD/KRW falling 0.3% after Friday’s losses.
Interest Rate Decisions From Fed and BOJ Awaited
Markets expect both the Federal Reserve and Bank of Japan (BOJ) to leave interest rates unchanged this week.
The BOJ meets Thursday and is likely to hold steady due to stabilizing global trade and domestic political concerns. Last week’s U.S.–Japan trade agreement may give the BOJ some space to consider future rate hikes.
However, sentiment in Japan remains fragile. The ruling coalition suffered losses in upper house elections, and rumors are swirling about Prime Minister Shigeru Ishiba’s possible resignation.
The Japanese yen (USD/JPY) pair was stable on Monday after strong gains last week.
On Wednesday, the Fed is also expected to maintain its current policy stance. Traders will closely watch Fed Chair Jerome Powell’s comments for clues on future interest rate moves.
