Investing.com — Most Asian currencies moved within a tight range on Tuesday as traders assessed the potential for looser trade tariffs under incoming US President Donald Trump, while the dollar stabilized after some overnight losses.
The Chinese yuan severely underperformed its peers after the onshore pair hit its weakest level in 17 years on Monday. Although the currency recovered some ground, it remained vulnerable, with new US restrictions against Chinese companies further increasing pressure on the currency.
The dollar also held steady after recovering much of its overnight losses after a recent report sparked increasing speculation about what exactly Trump’s tariff plans will entail.
The Japanese yen rose 0.4% to its highest level in almost six months, while the Australian dollar rose 0.2%. Australian data for November will be released on Wednesday.
The South Korean won pair fell slightly, while the Indian rupee pair stabilized after a sharp recovery from record highs above 86 rupees.
The dollar remains above a one-week low amid rate speculation
The and rose slightly in Asian trading, recovering from a one-week low on Monday.
The dollar recovered much of Monday’s losses after Trump denied a Washington Post report that his administration will impose less severe trade tariffs than initially promised.
Trump – who will take office in less than two weeks – has promised to impose steep tariffs on China and other major economies, raising concerns about a renewed global trade war.
The prospect of more rates was a key driver of the dollar’s recent rally, as was growing confidence that the Federal Reserve will cut rates at a slower pace in 2025. Hawkish comments from Fed officials reinforced this idea this weekend.
The focus this week is now on the key December figures, due on Friday, for more signals about the US economy and labor market.
The Chinese yuan is vulnerable due to trade jitters in the US
The Chinese yuan was the worst-performing Asian currency this week after hitting its weakest level in 17 years on Monday.
The yuan’s onshore pair rose 0.3% on Tuesday as the Chinese currency remained vulnerable on the prospect of more headwinds in US trading.
The US on Tuesday added tech giants Tencent Holdings Ltd (HK:) and Contemporary Amperex Technology (SZ:) to a blacklist of companies linked to the Chinese military, further straining ties between the world’s largest economies .
Beijing is expected to hand out even more stimulus measures in the face of a renewed trade war with the US
The focus this week is on , due Thursday, for more signals on Asia’s largest economy, which is struggling to sustain growth.
