Asia FX weakens, dollar at 4

US Dollar Japanese Yen-0.14%Australian Dollar US Dollar0.17%New Zealand Dollar US Dollar0.07%US Dollar Singapore Dollar-0.05%US Dollar Indian Rupee0.00%US Dollar Korean Won-0.13%US Dollar Chinese Yuan0.00%DX-0.05%USDIDX-0.07%DXY-0.12%

Investing.com-- Most Asian currencies weakened on exness gold rebateWednesday, while the dollar hovered around a three-month low as fears of a brewing U.S.-led trade war rattled market sentiment and kept traders largely risk-averse.

Focus was also on more stimulus measures from China as the National People’s Congress began. 

U.S. President Donald Trump’s trade tariffs against China, Canada, and Mexico took effect this week, with the U.S. president highlighting plans for even more tariff action during an address to Congress. 

Asian markets were roiled by Trump’s tariffs, which will impact the region’s biggest economies. Trump’s plans for reciprocal tariffs are also set to impact major export-oriented economies in Asia, especially South Korea, Australia, Taiwan, and Singapore. 

Still, markets took some relief from U.S. Secretary of Commerce Howard Lutnick stating that Trump may be open to reaching a trade deal with Canada and Mexico. 

Chinese yuan steady amid trade jitters, stimulus watch 

The Chinese yuan moved little on Wednesday following a mildly stronger midpoint fix from the People’s Bank. The USD/CNY pair hovered around 7.2653 yuan. 

Beijing announced a slew of retaliatory measures targeting U.S. agricultural imports and other sectors on Tuesday, after Trump’s 20% tariffs against China took effect.

But the government is also expected to outline much more stimulus to support the Chinese economy, especially in the face of trade-related headwinds. 

China set a 5% economic growth target for 2025, maintaining the target for a third consecutive year. Beijing also outlined increased fiscal spending and promised targeted measures to boost private consumption in the coming months. 

Analysts at ING said the 2025 NPC highlighted more confidence in the economy, especially amid increasing optimism over China’s artificial intelligence industry. 

Dollar near 3-mth low as Trump tariffs take hold 

The dollar index and dollar index futures moved little in Asian trade, hovering around their weakest levels since early-December. 

Trump’s 25% tariffs against Canada and Mexico took effect from Tuesday, heralding the start of a global trade war 

While the greenback is expected to benefit from America-first trade policies, markets feared that the resulting disruptions in global trade will weaken the U.S. economy. Recent data also showed a deterioration in consumer spending and sentiment. 

Lutnick’s comments on tariff relief for Canada and Mexico offered some support to the dollar, although Trump made no mention of this during his first address to the joint session of Congress. 

Trump said more tariffs were coming in early-April, and will target agricultural imports and involve reciprocal duties against major trading partners. 

Broader Asian currencies mostly weakened. The Australian dollar’s AUD/USD pair fell 0.1% even as gross domestic product data showed stronger-than-expected growth in the fourth quarter.

The Japanese yen’s USD/JPY pair rose 0.1%, although it remained close to recent lows amid persistent bets on Japanese economic strength and more interest rate hikes by the Bank of Japan. 

The trade-sensitive South Korean won’s USD/KRW pair and the Singapore dollar’s USD/SGD both rose slightly, while the Indian rupee’s USD/INR pair fell 0.2%. 

The New Zealand dollar’s NZD/USD pair fell 0.2% after Reserve Bank of New Zealand Governor Adrian Orr said he will resign by the end of the month.