Throughout the Asian markets on Monday, currencies remained stable as the U.S. dollar showed slight softness in light of renewed uncertainties surrounding U.S.-China trade relations and dovish guidance from Federal Reserve Governor Christopher Waller.

Dollar Under Pressure from Rate Hints

• Fed Governor Comments: Waller’s openness towards potential interest rate cuts this year contributed to a decline in the dollar value.

• Weak Chinese PMI Data: Data released over the weekend negatively impacted regional sentiment, despite mainland market closures.

To keep an eye on ongoing economic developments and Fed commentary, leverage available economic calendars to monitor PMI readings and related announcements.

Yen Strength Gains Safe Haven Appeal

• ID/JPY Falls: The USD/JPY currency pair declined by 0.1%, driven by cautious market positioning ahead of high-profile trade discussions.

• Increased Risk Aversion: Trump’s threat to double steel and aluminum tariffs has directed investment away from equities toward safe-haven currencies like the Japanese yen.

Monitor real-time FX rates for the USD, JPY, and other major currencies for updated trading information.

Yuan Weakness Responds to Tariff Disputes

• Offshore Yuan Movement: While onshore markets were inactive, the offshore yuan rose by 0.2%, reflecting moments of weakness as traders react to the trade climate.

• Ongoing Disputes: Tensions pertaining to U.S. chip controls versus China’s rare-earth export restrictions continue to impact yuan volatility.

Investor Takeaways

1. Focus on Trade Talks: Investors should stay alert to impending U.S.-Japan and U.S.-China meetings that could shift market dynamics.

2. Fed Rate Outlook: Additional dovish perspectives from the Fed may keep upward pressure on Asian currencies as the dollar remains weak.

3. Economic Indicators: Weak PMI readings could reinforce risk sentiment and elevate interest in safe-haven currencies.