Asia FX ticks up as Trump softens tone on Fed, China tariffs; yen lags on weak PMI

Published 23/04/2025, 06:04
© Reuters.

Investing.com-- Most Asian currencies edged higher on Wednesday after President Donald Trump walked back threats to remove Federal Reserve Chair Jerome Powell and hinted at easing steep trade tariffs on China, while the Japanese yen fell after weak factory activity data.

The US Dollar Index, which measures the greenback against a basket of major currencies, rose 0.3% after regaining some ground from a three-year low on Tuesday.

Trump retracts Fed overhaul threat, signals China tariff negotiations

President Donald Trump on Tuesday said he has "no intention" of firing Federal Reserve Chair Jerome Powell, after recent sharp criticisms that unsettled financial markets.

Trump’s earlier remarks and frustration over the Fed’s reluctance to cut interest rates had raised concerns about potential political interference in the central bank’s independence.

Trump also expressed optimism over potential trade negotiations with China. He said a potential deal could lead to a “substantial” reduction in tariffs. But "it won’t be zero," he added.

These developments eased some tariff tensions among investors, although they remained on edge over Trump’s fluctuating policy.

The Chinese yuan’s onshore USD/CNY pair fell 0.2%, while the offshore pair USD/CNH lost 0.3%.

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

The South Korean won’s USD/KRW pair fell 0.3%, while the Singapore dollar’s USD/SGD was largely muted. 

The Indian rupee’s USD/INR pair was also steady.

Yen lower, Japan manufacturing PMI contracts for 10th straight month in April

The Japanese yen’s USD/JPY edged 0.3% higher on Wednesday after two days of sharp declines.

Data on Wednesday showed that Japanese manufacturing activity shrank for the tenth consecutive month in April as new orders declined significantly amid U.S. tariff concerns.

The au Jibun Bank manufacturing PMI came in at 48.5 in April, below the forecast of 48.7.

Meanwhile, Japanese services activity rebounded, with the au Jibun Bank services PMI rising to 52.2 in April, from a neutral reading of 50.0 in March.

The overall composite PMI expanded to 51.1 in April from 48.9 in March.

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