Written by The Banking Post
Asian equities dipped on Wednesday while the US dollar hovered near 3½-year lows, as investors grappled with the timing of Federal Reserve rate cuts and a looming July 9 tariff deadline set by President Donald Trump.
Market Performance
- MSCI’s Asia-Pacific index (ex-Japan) eased 0.23%, retreating from last week’s November 2021 peak.
- Japan’s Nikkei slid 0.78%, led lower by tech names; Taiwan’s TWII and South Korea’s Kospi also fell after June’s strong rally in US tech.
Tariff Negotiations Heat Up
Trump reiterated he won’t extend the July 9 deadline for trade deals, casting doubt on a pact with Japan but expressing confidence in a deal with India. The warning has kept Asian exporters on edge as they brace for potential tariff hikes.
US Data and Fed Outlook
Tuesday’s report showed May job openings rising, underscoring US labour-market resilience and shifting attention to Thursday’s payrolls print. Fed Chair Jerome Powell, under pressure from Trump for immediate cuts, said the central bank will “wait and learn more” about tariff-driven inflation before easing policy. Markets still price in about 64 basis points of rate cuts this year, with just a 21% chance of a July move.
Dollar and Currency Moves
- The dollar index held at 96.65, down over 10% year-to-date—its weakest first half since the 1970s.
- The euro traded near $1.1793, close to a three-and-a-half-year high; the yen was steady at 143.52 per dollar.
Carol Kong of Commonwealth Bank warns that disappointing US data, trade setbacks or concerns over the so-called “One Big Beautiful Bill” could spur further dollar selling.
Fiscal Concerns: Trump’s $3.3 Trillion Bill
Senate passage of Trump’s massive tax-and-spending package—set to add $3.3 trillion to the national debt—has fanned fiscal worries. Yet 10-year Treasury yields remained around 4.245% after touching two-month lows. BNY’s Aninda Mitra warns the legislation “hard-wires” a worsening fiscal trajectory, keeping term premia elevated and limiting any steep drop in long-term yields.
Safe-Haven Gold
Spot gold eased to $1,332.19 an ounce after a 1% jump in the previous session. The metal is up about 27% this year as investors seek refuge from policy and trade uncertainties.
