
FX steady, stocks retreat as caution lingers ahead of Trump's tariff deadline
Trump said that his administration will begin sending letters to 10 to 12 countries on Friday, informing them of tariff rates their exports would face after the July 9 deadline expires.
Only the UK, Vietnam and China have signed trade agreements with the US as yet, with others scrambling to clinch one before the sweeping duties come into effect and threaten economic growth.
"Many observers assume that a tariff of at least 10 per cent will ultimately be agreed for most trading partners... even if the final rate in the US were to be significantly higher than last year, markets seem to assume that this will not trigger a major economic crisis," said analysts at Commerzbank.
"The markets seem to have abandoned the worst-case scenario and are assuming that the economy will ultimately weather Trump's tariff policy."
Moreover, some concerns over the fiscal health of the US remained as the Congress passed Trump's tax-cut and spending package on Thursday. It is estimated to add over US$3 trillion to the US fiscal debt.
The dollar index was flat on the day, still trading around multi-year lows.
Trading was expected to be thin as markets in the US were closed for the 4th of July holiday.
MSCI's index tracking global emerging market currencies was 0.2 per cent lower, but was looking at its fifth weekly gain.
Emerging European currencies were subdued against the euro, but the Polish zloty fell 0.2 per cent.
A report said that central banker Ludwik Kotecki sees room for two 25 basis point interest rate cuts this year, after the bank delivered a surprise trim of the same magnitude earlier this week.
The Czech crown was slightly higher, after a flash estimate put annual inflation in June in-line with expectations and retail sales continued to show solid growth.
Turkey's lira was little changed against the dollar, and so were its stocks. The stocks index was set for its biggest weekly gain since March.
South Africa's rand edged 0.3 per cent lower, while its stocks were flat.
Bourses in emerging European economies were also lower, with ones in Poland and Hungary down 1.2 per cent and 0.4 per cent respectively.
Poland's blue chip index was set for a fourth week of gains.
MSCI's gauge of global EM stocks was down 0.6 per cent, but was set to log marginal gains this week.
Investors took on more riskier assets this week in a bid to diversify away from US amid mounting fiscal worries, and after strong jobs data on Thursday bolstered risk appetite globally.
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The Star
6 hours ago
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