Asia FX dips as traders brace for more Trump tariffs; RBNZ holds rates steady

Investing.com-- Most Asian currencies fell on Wednesday as investors cautiously awaited more trade tariff announcements by U.S. President Donald Trump, while they also weighed the Reserve Bank of New Zealand’s rate pause and a mild increase in China’s consumer inflation.

Regional currencies slid sharply at the start of the week when President Trump announced higher tariff rates for key trading partners. 

The US Dollar Index, which measures the greenback against a basket of major currencies, rose 0.2% in Asia hours. Dollar Index Futures also traded 0.2% higher.

Markets brace for more tariff announcements

U.S. President Donald Trump on Monday began sending tariff letters, notifying 14 countries that sharply higher duties will take effect on August 1.

Of the 14 countries, nine were in Asia. The tariff letters outlined a 25% levy on all goods from Japan and South Korea, while some smaller nations face up to 40% tariffs.

“Tariff rates that are higher than the 10% baseline are a worse-than-expected outcome for Asia, unless we see successfully negotiated deals over the next three weeks,” ING analysts said in a recent note.

On Tuesday, Trump said he would impose a 50% tariff on imported copper and would soon roll out long-promised duties on semiconductors and pharmaceuticals.

Moreover, he plans to release a list of seven countries “having to do with trade” on Wednesday morning, and additional countries in the afternoon, Trump said in a social media post late Tuesday, but did not provide further details.

Asia FX sees broad-based losses

The South Korean won’s USD/KRW pair rose 0.4%, while the Japanese yen’s USD/JPY gained 0.2%.

The Singapore dollar’s USD/SGD pair added 0.2%, while the Indian rupee’s USD/INR pair ticked up 0.1%.

The Australian dollar’s AUD/USD pair edged 0.2% lower, after sharp gains in the previous session when the country’s central bank left interest rates unchanged in a surprise move.

Elsewhere, the Thai baht’s USD/THB pair rose 0.4%, while the Indonesian rupiah’s USD/IDR climbed 0.5%.

RBNZ holds rates steady; China CPI rises slightly

The Reserve Bank of New Zealand held its interest rates steady on Wednesday, as widely expected, but signaled that a rate cut could be on the horizon if inflationary pressures continue to ease.

The New Zealand dollar’s NZD/USD pair fell 0.3%.

In China, data showed that the consumer price index edged up slightly in June, as increased government subsidies and a modest easing of trade tensions provided a mild boost to consumer spending.

The Chinese yuan edged down, with both the onshore USD/CNY and offshore USD/CNH pairs gaining 0.1%.