Trump slaps 30% tariffs on EU, Mexico
Investing.com-- Most Asian currencies moved in a tight range on Tuesday, while the dollar recovered some recent losses as traders remained on edge over more U.S. trade tariffs and softer global economic conditions.
The Australian dollar was the worst performer in the region following dovish signals from the Reserve Bank, as well as a host of weak first-quarter economic prints.
Regional currencies had advanced against a softer dollar in the past month, although this advance was stalled by persistent risk aversion, especially in forex markets. The Japanese yen, however, benefited the most from this trade, although it softened slightly on Tuesday.
The dollar index and dollar index futures rose 0.2% each in Asian trade, recovering mildly from losses in the overnight session.
Risk aversion was also furthered by geopolitical strife, as U.S.-Iran nuclear talks appeared to be falling through, while a Russia-Ukraine ceasefire also appeared distant.
Chinese yuan flat amid weak PMIs, US tensions
The Chinese yuan moved little on Tuesday, with the USDCNY pair hovering around 7.1978 yuan after a long weekend. The offshore USDCNH pair fell 0.1% after rising on Monday.
Recent purchasing managers index readings signaled persistent weakness in the Chinese economy, especially amid increased U.S. trade tariffs.
Caixin manufacturing PMI data showed an unexpected contraction in May, coming in line with government PMI data released over the weekend.
The reading showed export orders for Chinese goods were stalling amid high U.S. tariffs. While Beijing and Washington had agreed to temporarily slash their tariffs in May, recent reports showed talks had stalled, while the rhetoric between the two countries remained abrasive.
U.S. President Donald Trump recently accused China of violating the May trade agreement, which China denied. Beijing also repeatedly criticized tighter U.S. controls on its chip industry over the past few weeks.
Broader Asian currencies moved in a flat-to-low range amid little improvement in sentiment. The Japanese yen’s USDJPY pair rose 0.3%, while the Singapore dollar’s USDSGD pair rose 0.2%.
The South Korean won’s USDKRW pair rose 0.2% in holiday-thinned trade, as local markets were closed for a snap presidential election.
The Indian rupee’s USDINR pair tread water before a closely watched Reserve Bank of India (NSE:BOI) rate decision later this week. The RBI is expected to cut rates by another 25 basis points.
Aussie slips on dovish RBA, weak data
The Australian dollar was the worst performer for the day, with the AUDUSD pair losing 0.5% after the minutes of the Reserve Bank of Australia’s May meeting largely reiterated the central bank’s dovish stance.
A host of weak economic readings for the first quarter– including a bigger-than-expected current account deficit– also dampened sentiment towards Australia before Q1 gross domestic product data due on Wednesday.
The RBA had cut rates by 25 basis points in May, and presented a largely dovish outlook on the Australian economy, citing increased headwinds from trade tariffs.