Asian currencies weakened broadly on Monday amidst persistent uncertainty over the U.S.-China trade war, keeping risk appetite subdued. At the same time, the U.S. dollar saw slight gains, reflecting cautious investor sentiment across global markets.

Trade War Jitters Continue to Weigh on Markets

Recent comments from U.S. Treasury Secretary Scott Bessent fueled market concerns. Bessent acknowledged lack of clarity regarding dialogues between President Donald Trump and Chinese President Xi Jinping, noting that communications were occurring mainly through the International Monetary Fund (IMF), bypassing direct trade negotiations.

Key highlights include:

• Mixed signals from Washington and Beijing
• No formal confirmation of any active trade negotiations
• Beijing denying claims of ongoing talks by Trump

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Regional Currency Movements

• Most Asian currencies remained under pressure after experiencing significant losses recent weeks.
• The Japanese yen stood out as a rare performer, seeing some safe-haven demand ahead of a critical Bank of Japan policy meeting scheduled this week.
• The South Korean won and the Indian rupee continued to slide due to tepid risk sentiment.

Dollar Edges Higher

The U.S. dollar index rose roughly 0.2% during the Asian trading hours, although it remains close to a three-year low reached earlier in April.

This increase reflects:

• Cautious demand for safe assets
• Heightened concerns about vulnerabilities in the U.S. economy due to aggressive trade policies
• Volatility in U.S. Treasury markets indicating broader market anxiety

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Final Thoughts

With Trump’s shifting tariff strategies and inconsistent messages from U.S. officials, investors tread carefully. Until there is credible progress in trade discussions, expect currency volatility and safe-haven behaviors to dominate the near-term forecast.