Asian markets cautious as Trump's tariff deadline, Fed uncertainty weigh
NEW YORK: Most Asian currencies held steady on Friday as a shaky dollar and concerns over the Federal Reserve's independence kept investors cautious, while stocks traded mixed ahead of looming trade deadlines tied to US President Donald Trump's tariffs.
The Philippines' stocks rose more than 1 per cent to hit a two-week high, while Singapore's benchmark index gained 0.6 per cent. On the other end, South Korean shares fell 1.2 per cent on profit-booking following a post-election rally. The benchmark, however, is up nearly 13 per cent this month, its best monthly gain since November 2020.
Thai shares dropped 1.5 per cent on the day but set for their best week in eight. The Bank of Thailand left interest rates unchanged on Wednesday, mirroring other central banks in the region, taking a wait-and-watch approach in their recent meetings.
Investor focus has now shifted to how trade negotiations will progress ahead of the July 9 deadline for Trump's reciprocal tariffs. Thailand was slapped with a 36 per cent US tariff on its exports and was among six of the nine Southeast Asian countries named by Trump that were hit with larger-than-expected tariffs ranging from 32 per cent to 49 per cent. It is set to hold trade talks with Washington next week.
The dollar was largely subdued as markets priced in deeper US rate cuts, with speculation that Trump could name a more dovish successor to Fed Chair Jerome Powell, adding to expectations of policy easing.
Investors also looked ahead to the US Personal Consumption Expenditures (PCE) index data — the Fed's preferred inflation gauge — due later in the day.
"Combination of the 'sell USD' trade, consistent stronger Chinese yuan fix seen over the last few sessions and geopolitical de-escalation... can continue to fuel the rally in Asia excluding Japan," OCBC currency strategist Christopher Wong said.
The Taiwan dollar outperformed regional peers, rising as much as 0.7 per cent to its highest level since mid-April 2022, defying the broader market trend. Traders said the local currency's rise was being driven by expectations of the Fed's interest rate cuts, the general global weakness of the greenback and the continued flood of foreign capital into the island.
"Foreign investors are dumping US dollars aggressively, but our currency should be Asia's strongest," a Taiwan-based bank trader said.
Elsewhere, the Thai baht slipped 0.1 per cent, while the South Korean won fell 0.2 per cent, though it remained on course for its strongest week since June 2.
Markets in Indonesia and Malaysia were closed for public holidays.
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