 Dollar is broadly weaker in today’s Asian session, though losses remain contained outside of its sharper decline against Yen. US President Donald Trump reiterated his intention to impose 25% tariffs on cars, semiconductors, and pharmaceutical imports, but markets are showing growing indifference to these repeated trade threats. The lack of clarity on how these tariffs will be structured, their relationship to reciprocal duties, and any potential further escalation has left markets in a wait-and-see mode. Many Fed policymakers have noted that the uncertainty surrounding trade policy could keep Fed from easing further until the economic impact becomes clearer. This Fed rate outlook is keeping Dollar's losses limited for now. Geopolitical concerns remain a significant factor in risk sentiment, particularly regarding the "peace negotiations" over Russia’s invasion of Ukraine. Trump’s latest remarks, where he referred to Ukrainian President Volodymyr Zelenskyy as a "dictator", have triggered sharp backlash from Ukraine and European leaders. Former US Vice President Mike Pence also criticized Trump, stating that Ukraine did not "start" the war, emphasizing that Russia launched an unprovoked attack that has claimed hundreds of thousands of lives. These developments cast doubts on Trump’s ability to fulfill his campaign promise of quickly brokering an end to the war. Market uncertainty around geopolitical risks remains elevated. Meanwhile, Yen's near term rally is regaining strength, continuing to draw support from solid domestic economic data and rising speculation that BoJ may raise interest rates again sooner than expected. Optimism surrounding this year’s wage negotiations is also boosting sentiment, as higher wages could support domestic inflation, strengthening the case for policy normalization. Additionally, Japan’s 10-year JGB yield remains near 1.44%, its highest level in nearly 15 years, providing further tailwinds for Yen.... |
