Asian currencies extended losses on Tuesday as the U.S. dollar rebounded, fueled by fresh tariff concerns and expectations of higher-for-longer interest rates.

Meanwhile, the RBA delivered its first rate cut in over four years, signaling a cautious approach to monetary easing.

1. U.S. Dollar Rebounds Amid Tariff Uncertainty

• The U.S. Dollar Index (DXY) rose 0.2%, recovering from last week’s 1% decline.
• Traders are flocking to safe-haven assets amid fears of an escalation in global trade tensions.
• Analysts expect substantial tariffs in Q2 2025, boosting dollar demand.

Market Impact:

• A stronger dollar pressures emerging markets, particularly in Asia.
• Higher U.S. interest rate expectations further support dollar strength.

2. RBA Cuts Rates to 4.10%

First rate cut since 2020 as inflation moderates. RBA remains cautious about further easing.

• AUD/USD fell 0.2% to 0.6347 following the rate cut.
• The RBA’s measured approach signals uncertainty over additional cuts.

3. Asian Currencies Decline

China’s yuan rose 0.2% offshore as traders remained cautious.

• Japanese yen up 0.4%, reacting to strong economic data.
• Indian rupee down 0.1%, facing inflation & policy headwinds.

Watch for Fed signals on rate cuts, as delayed easing could prolong currency pressures.

Final Thoughts

The U.S. dollar remains strong amid escalating tariff concerns and a resilient U.S. economy. Investors should closely monitor central bank responses in Asia and upcoming trade policy decisions.