Asia FX gains as dollar remains weak on Trump

US Dollar Japanese Yen-0.17%Australian Dollar US Dollar-0.09%US Dollar Singapore Dollar-0.03%US Dollar Indian Rupee-0.28%US Dollar Korean Won0.60%US Dollar Chinese Yuan0.12%USDIDX-0.08%US Dollar Chinese Yuan Offshore0.14%JPYFIX=RTS0.00%DXY0.04%

Investing.com-- Most Asian currencies rose on Open an account and get Tuesday as the U.S. dollar hovered near a three-year low after President Donald Trump’s push to overhaul the Federal Reserve, while the Chinese yuan dipped amid persistent U.S.-China trade tensions.

The US Dollar Index, which measures the greenback against a basket of major currencies, inched 0.1% lower in Asian trading after slumping over 1% on Monday to its lowest level since March 2022.

Yen, Aussie dollar gain as dollar weakens on Trump’s Fed remark

White House economic advisor Kevin Hassett said on Friday that President Trump and his team were continuing to study whether they could fire Federal Reserve Chair Jerome Powell. 

Trump on Monday reiterated his call for the Fed to reduce rates, saying the U.S. economy could slow down if the Fed does not cut interest rates immediately.

The development comes after Powell last week said that the central bank was not inclined to cut interest rates in the near future, citing the inflationary pressures and economic uncertainties introduced by the new tariffs.

The dollar weakened further, spilling gains in some Asian currencies.

The Japanese yen’s USD/JPY pair fell 0.5% on Tuesday 

The Australian dollar’s AUD/USD pair gained 0.4%.

The Singapore dollar’s USD/SGD pair and the South Korean won’s USD/KRW, both inched 0.1% lower.

The Indian rupee’s USD/INR pair also edged 0.1% lower.

US-China tensions remain elevated; yuan falls despite PBOC’s strong fix

China on Monday issued a stern warning to nations contemplating trade agreements with the U.S. that could undermine Chinese interests. 

The Chinese Ministry of Commerce accused Washington of employing tariffs and monetary sanctions to coerce countries into limiting their trade with China. 

This warning comes amid escalating tensions in the ongoing Sino-U.S. trade conflict, which has seen the U.S. impose tariffs of up to 145% on Chinese goods, leading to retaliatory duties from China.

The Chinese yuan’s onshore USD/CNY pair rose 0.2% to 7.3074 yuan, while the offshore pair USD/CNH added 0.3%.

This was despite the People’s Bank of China (PBOC) setting the yuan’s daily midpoint significantly stronger than expected on Monday, signaling its intent to stabilize the currency amid growing economic uncertainty. 

The central bank fixed the yuan at 7.2074 per U.S. dollar, 19 pips stronger than the previous session, and 850 pips stronger than what traders had anticipated, marking one of the biggest deviations from market forecasts in recent months.

The move underscores Beijing’s commitment to maintaining financial stability even as external factors, including U.S. trade tariffs, weigh on investor sentiment.