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Straits Times
2 days ago
- Business
- Straits Times
Asia markets brace for renewed tariff fallout
CANBERRA – Asian stocks face renewed pressure on July 8 after US President Donald Trump announced higher tariffs on key regional trading partners including Japan and South Korea. Stock futures pointed to declines in Tokyo and Sydney, after Wall Street equities fell from all-time highs overnight and the US dollar climbed. US equity contracts dropped in early Asia trading. Megacaps led losses in the US on July 7 as Tesla tumbled nearly 7 per cent after Elon Musk announced he's formed a political party, raising concern about his company's outlook. Emerging markets got hit as Mr Trump warned he'd add extra tariffs on countries aligning with 'the Anti-American policies of Brics.' Mr Trump released the first in a series of tariff warning letters, just two days before agreements are due on countries facing his April 2 so-called reciprocal levies. The new rates include 25 per cent duties on goods from Japan, South Korea, and Malaysia; 32 per cent on Indonesia; 35 per cent on Bangladesh; 36 per cent on Thailand and Cambodia; and 40 per cent on Laos and Myanmar. 'There is likely to be considerable concern in Asia that 90 days of supposed negotiations have so far produced many US tariff rates similar to the April 2 shock,' said Sean Callow, a senior analyst at InTouch Capital Markets in Sydney. 'The US clearly only has bandwidth for negotiation with a handful of trading partners, with the rest seemingly blamed for failing to reach a deal.' The yen slid over 1 per cent against the US dollar in New York trading overnight. Despite the market turmoil from Mr Trump's tariffs, Japanese shares had rebounded from April lows, reflecting optimism that Japan and others would strike US deals that avoid derailing growth. White House Press Secretary Karoline Leavitt said there would be around a dozen countries that receive notifications about their tariffs on July 7 directly from the president. Additional letters will be sent in the coming days, she said. 'Investors should be alert to headline risk,' said Fawad Razaqzada at City Index and 'The scope for last-minute deals is high, but so too is the possibility of renewed trade tensions.' Analysts said that one positive to be taken away from the latest trade developments was that the higher tariffs won't be in place during July as Mr Trump extended the deadline for the steeper levies to kick in until August. That means 'an indirect extension' of the original 90-day pause that would expire on July 9. 'The outcome could certainly have been more dire for the economic outlook had the additional window of relief not been included in the latest trade-war salvo,' they noted. The European Union is not expecting to receive a letter setting tariff rates imminently, according to a person familiar with those discussions. The EU is seeking to conclude a preliminary deal this week that would allow it to lock in a 10 per cent tariff rate beyond an Aug 1 deadline as they negotiate a permanent agreement. Meantime, US Treasury Secretary Scott Bessent told CNBC said he expected to meet with his Chinese counterpart in the coming weeks. Indian officials familiar with the matter said the nation had made its best offer on trade and the fate of an interim deal now lies in the hands of Mr Trump. Negotiators conveyed to Washington the red lines they were unwilling to breach in finalising an agreement, including allowing the US to export genetically modified crops to India, and opening up India's dairy and automobile sectors to America. In Rio de Janeiro, several leaders responded to Trump's tariff threats against the 10-member Brics group. Brazilian President Luiz Inacio Lula da Silva joined South Africa in blasting the US president. In 2024, the list of Brics members expanded beyond the original group of Brazil, Russia, India, China and South Africa to include Egypt, Ethiopia, Indonesia, Iran, Saudi Arabia and the United Arab Emirates. The countries in the bloc - which was designed to boost the nations' international standing and challenge the US and western Europe - account for more than half of the world's population. So far, the US economy is holding up under the threat of a spiralling global trade war. Hiring is healthy, and inflation has remained tame. But the Federal Reserve is wary about tariffs despite pressure from Mr Trump to lower rates, and wants to see how they feed through to output in the next few months. BLOOMBERG
CNA
26-06-2025
- Business
- CNA
Dollar slips on Fed credibility concerns, euro close to 4-year high
SYDNEY :The dollar slipped to multi-year lows against the euro and Swiss franc on Thursday as concerns about the future independence of the U.S. Federal Reserve undermined faith in the soundness of the country's monetary policy. According to a Wall Street Journal report, U.S. President Donald Trump had toyed with the idea of selecting and announcing Federal Reserve Chair Jerome Powell's replacement by September or October, aiming to undermine his position. "Markets are likely to bristle at any early move to name Powell's successor, particularly if the decision appears politically motivated," said Kieran Williams, head of Asia FX at InTouch Capital Markets. "The move would raise questions about the potential erosion of Fed independence and potentially weaken credibility," he added. "If this was the case it could recalibrate rate expectations, trigger reassessment of dollar positioning." Trump on Wednesday called Powell "terrible" for not lowering interest rates sharply, while the Fed Chair was telling the Senate that policy had to be cautious as the President's tariff plans were a risk to inflation. Markets have nudged up the chance of a rate cut at the Fed's next meeting in July to 25 per cent, from just 12 per cent a week ago, and are pricing in 64 basis points of cuts by year-end, up from around 46 basis points last Friday. "While this stands to be the latest hammer blow to the dollar delivered by the hands of the White House, I do expect it to gain some support in the coming sessions from month-end and quarter-end rebalancing flows," said Tony Sycamore, an analyst at IG. NOT SO EXCEPTIONAL For now, though, the dollar was under broad pressure as the euro gained 0.4 per cent to $1.1710, its highest since September 2021. The break of resistance at $1.1692 was brief, however, and it was later back at $1.1680. Sterling rose 0.3 per cent to $1.3723, its highest since January 2022, while the dollar was at its lowest in more than a decade on the Swiss franc at 0.80255 . The franc also struck a record peak on the yen around 180.55 overnight. The dollar lost 0.4 per cent on the yen to 144.57, while the dollar index sank to its lowest since early 2022 at 97.265 . Trump's chaotic tariff policies are also coming back into focus as the clock ticks down to his July 9 deadline for trade deals. JPMorgan on Wednesday warned the hit from tariffs would slow U.S. economic growth and lift inflation, resulting in a 40 per cent chance of a recession. "The risk of additional negative shocks is elevated, and we expect U.S. tariff rates to move higher," JPMorgan analysts said in their report. "The upshot of these developments is that our baseline scenario incorporates the end of a phase of U.S. exceptionalism." The ending of "exceptionalism" has been a major theme in the dollar's decline in recent months, as investors question its dominant reserve currency status and as the main safe haven among currencies. The euro has been a big beneficiary, with investors also hoping that massive new investment in European defence and infrastructure will bolster economic growth across the continent.
Zawya
26-06-2025
- Business
- Zawya
Dollar slips on Fed credibility concerns, euro tops $1.1700
SYDNEY: The dollar slipped to multi-year lows against the euro and Swiss franc on Thursday as concerns about the future independence of the U.S. Federal Reserve undermined faith in the soundness of the country's monetary policy. According to a Wall Street Journal report, U.S. President Donald Trump had toyed with the idea of selecting and announcing Federal Reserve Chair Jerome Powell's replacement by September or October, aiming to undermine his position. "Markets are likely to bristle at any early move to name Powell's successor, particularly if the decision appears politically motivated," said Kieran Williams, head of Asia FX at InTouch Capital Markets. "The move would raise questions about the potential erosion of Fed independence and potentially weaken credibility," he added. "If this was the case it could recalibrate rate expectations, trigger reassessment of dollar positioning." Trump on Wednesday called Powell "terrible" for not lowering interest rates sharply, while the Fed Chair was telling the Senate that policy had to be cautious as the President's tariff plans were a risk to inflation. Markets have nudged up the chance of a rate cut at the Fed's next meeting in July to 25%, from just 12% a week ago, and are pricing in 64 basis points of cuts by year-end, up from around 46 basis points last Friday. "While this stands to be the latest hammer blow to the dollar delivered by the hands of the White House, I do expect it to gain some support in the coming sessions from month-end and quarter-end rebalancing flows," said Tony Sycamore, an analyst at IG. NOT SO EXCEPTIONAL For now, though, the dollar was under broad pressure as the euro gained 0.4% to $1.1710, its highest since September 2021. The break of resistance at $1.1692 opened the way to the next chart target up at $1.1909. Sterling rose 0.3% to $1.3723, its highest since January 2022, while the dollar was at its lowest in more than a decade on the Swiss franc at 0.8030. The franc also struck a record peak on the yen around 180.55. The dollar lost 0.4% on the yen to 144.62, while the dollar index sank to its lowest since early 2022 at 97.401 . Trump's chaotic tariff policies are also coming back into focus as the clock ticks down to his July 9 deadline for trade deals. JPMorgan on Wednesday warned the hit from tariffs would slow U.S. economic growth and lift inflation, resulting in a 40% chance of a recession. "The risk of additional negative shocks is elevated, and we expect U.S. tariff rates to move higher," JPMorgan analysts wrote in their report. "The upshot of these developments is that our baseline scenario incorporates the end of a phase of U.S. exceptionalism." The ending of "exceptionalism" has been a major theme in the dollar's decline in recent months, as investors question its dominant reserve currency status and as the main safe haven among currencies. The euro has been a big beneficiary, with investors also hoping that massive new investment in European defence and infrastructure will bolster economic growth across the continent. (Reporting by Wayne Cole; Editing by Shri Navaratnam and Kate Mayberry)
CNA
26-06-2025
- Business
- CNA
Dollar slips on Fed credibility concerns, euro tops $1.1700
SYDNEY : The dollar slipped to multi-year lows against the euro and Swiss franc on Thursday as concerns about the future independence of the U.S. Federal Reserve undermined faith in the soundness of the country's monetary policy. According to a Wall Street Journal report, U.S. President Donald Trump had toyed with the idea of selecting and announcing Federal Reserve Chair Jerome Powell's replacement by September or October, aiming to undermine his position. "Markets are likely to bristle at any early move to name Powell's successor, particularly if the decision appears politically motivated," said Kieran Williams, head of Asia FX at InTouch Capital Markets. "The move would raise questions about the potential erosion of Fed independence and potentially weaken credibility," he added. "If this was the case it could recalibrate rate expectations, trigger reassessment of dollar positioning." Trump on Wednesday called Powell "terrible" for not lowering interest rates sharply, while the Fed Chair was telling the Senate that policy had to be cautious as the President's tariff plans were a risk to inflation. Markets have nudged up the chance of a rate cut at the Fed's next meeting in July to 25 per cent, from just 12 per cent a week ago, and are pricing in 64 basis points of cuts by year-end, up from around 46 basis points last Friday. "While this stands to be the latest hammer blow to the dollar delivered by the hands of the White House, I do expect it to gain some support in the coming sessions from month-end and quarter-end rebalancing flows," said Tony Sycamore, an analyst at IG. NOT SO EXCEPTIONAL For now, though, the dollar was under broad pressure as the euro gained 0.4 per cent to $1.1710, its highest since September 2021. The break of resistance at $1.1692 opened the way to the next chart target up at $1.1909. Sterling rose 0.3 per cent to $1.3723, its highest since January 2022, while the dollar was at its lowest in more than a decade on the Swiss franc at 0.8030. The franc also struck a record peak on the yen around 180.55. The dollar lost 0.4 per cent on the yen to 144.62, while the dollar index sank to its lowest since early 2022 at 97.401. Trump's chaotic tariff policies are also coming back into focus as the clock ticks down to his July 9 deadline for trade deals. JPMorgan on Wednesday warned the hit from tariffs would slow U.S. economic growth and lift inflation, resulting in a 40 per cent chance of a recession. "The risk of additional negative shocks is elevated, and we expect U.S. tariff rates to move higher," JPMorgan analysts wrote in their report. "The upshot of these developments is that our baseline scenario incorporates the end of a phase of U.S. exceptionalism." The ending of "exceptionalism" has been a major theme in the dollar's decline in recent months, as investors question its dominant reserve currency status and as the main safe haven among currencies. The euro has been a big beneficiary, with investors also hoping that massive new investment in European defence and infrastructure will bolster economic growth across the continent.
Malay Mail
26-06-2025
- Business
- Malay Mail
Dollar sinks to 3.5-year low against euro as Trump calls Fed chair ‘terrible' over rate policy
Dollar at multi-year lows on euro, sterling, Swiss franc WSJ reports Trump considering early pick for Fed chair Loss of US exceptionalism undermining dollar SYDNEY, June 26 — The dollar eased to a fresh 3-1/2-year low on the euro today as concerns about the future independence of the US Federal Reserve undermined faith in the soundness of the country's monetary policy. According to a Wall Street Journal report, US President Donald Trump had toyed with the idea of selecting and announcing Federal Reserve Chair Jerome Powell's replacement by September or October, aiming to undermine his position. 'Markets are likely to bristle at any early move to name Powell's successor, particularly if the decision appears politically motivated,' said Kieran Williams, head of Asia FX at InTouch Capital Markets. 'The move would raise questions about the potential erosion of Fed independence and potentially weaken credibility,' he added. 'If this was the case it could recalibrate rate expectations, trigger reassessment of dollar positioning.' Trump yesterday called Powell 'terrible' for not lowering interest rates sharply, while the Fed Chair was telling the Senate that policy had to be cautious as the President's tariff plans were a risk to inflation. Markets have nudged up the chance of a rate cut at the Fed's next meeting in July to 25 per cent, from just 12 per cent a week ago, and are pricing in 64 basis points of cuts by year-end, up from around 46 basis points last Friday. The dollar slipped across the board as the euro gained 0.2 per cent to reach US$1.1687 (RM4.95), its highest since October 2021. The next chart targets were US$1.1692 and US$1.1909. Sterling rose 0.2 per cent to US$1.3690, its highest since January 2022, while the dollar was at its lowest against the Swiss francs since 2011 at 0.8033. The franc also struck a record peak on the yen around 180.55. The dollar dipped 0.2 per cent on the yen to 144.89, while the dollar index sank to its lowest since early 2022 at 97.491. Trump's chaotic tariff policies are also coming back into focus as the clock ticks down to his July 9 deadline for trade deals. JPMorgan yesterday warned the hit from tariffs would slow US economic growth and lift inflation, resulting in a 40 per cent chance of a recession. 'The risk of additional negative shocks is elevated, and we expect US tariff rates to move higher,' JPMorgan analysts wrote in their report. 'The upshot of these developments is that our baseline scenario incorporates the end of a phase of US exceptionalism.' The ending of 'exceptionalism' has been a major theme in the dollar's decline in recent months, as investors question its dominant reserve currency status and as the main safe haven among currencies. The euro has been a big beneficiary, with investors also hoping that massive new investment in European defence and infrastructure will bolster economic growth across the continent. — Reuters
