Most Asian currencies were unchanged on Tuesday, as gains against a weaker dollar were offset by concerns about the United States sparking off a trade war with Brazil and Argentina, amid an ongoing dispute with China.
US President Donald Trump on Monday said he would impose tariffs on steel and aluminum imports from Brazil and Argentina, taking the trade war to new pastures even as the United States looks to sign a trade deal with China.
China’s yuan weakened slightly from its previous close of 7.0409 despite a subdued dollar hurt by unexpected decline in US construction spending.
“The weaker DXY has not translated into broad gains for Asian currencies, considering the risk-off tone in the markets triggered by President Trump’s latest tariff tantrum,” Han Tan, market analyst at FXTM said in a note.
Investors remain focused on US-China trade talks and “are expected to hold back from making large moves in the interim, unless signaled otherwise, amid hopes that a limited trade deal remains a likely outcome,” the FXTM note added.
Less than two weeks remain before President Trump has to decide whether to impose an additional 15 percent tariff on about $156 billion worth of Chinese products.
Washington’s latest tariff announcement against Brazil and Argentina has dampened prospects for the so-called “phase one” trade deal with Beijing, which is already on tenterhooks thanks to US legislation backing protesters in Hong Kong.
The South Korean won was set to be the worst regional performer for the day and declined 0.3 percent.
Tuesday marks the sixth consecutive session of falls for the won, which is especially sensitive to trade headlines due to South Korea’s dependence on electronic exports.
Singapore manufacturing data, which is expected later in the day, dotted an otherwise light data calendar for the region. The Singapore dollar traded 0.1 percent higher.
The Malaysian ringgit strengthened 0.2 percent ahead of trade data expected on Dec. 4. The country’s exports likely fell for a third straight month in October, a Reuters poll showed, but trade surplus is expected to expand. – Reuters