On Wednesday, most Asian currencies showed little movement against the dollar as investors cautiously assessed the outcome of the US-China trade negotiations. The two sides reached a framework agreement on a potential trade deal after two days of intensive talks in London.
The framework aims to end the Geneva truce and resolve export control disputes. It intends to lift China’s restrictions on rare earth mineral exports in exchange for the US easing certain export restrictions, especially in the semiconductor sector. However, the proposed agreement still requires formal approval from US President Donald Trump and China’s top leadership.
Investors remained vigilant ahead of the release of the US consumer inflation report, watching for signs of tariff-driven price pressures that could affect the Federal Reserve’s policy path. The dollar index, which measures the greenback against a basket of major currencies, rose 0.1% during the Asian trading session, while the dollar index futures remained relatively stable.
In the Asian stock markets, there was a slight uptick. But the currency market stayed cautious due to the lack of specific details on tariff reductions.
The onshore USD/CNY and offshore USD/CNH exchange rates of the Chinese yuan remained unchanged on Wednesday. The USD/JPY rate edged up 0.1%, and the USD/KRW rate gained 0.3%. The USD/SGD held steady, while the USD/INR dipped 0.1%. The AUD/USD also declined 0.2%. Meanwhile, the USD/PHP, USD/THB, and USD/TWD in other regions showed no change.
The market is now awaiting the US CPI data to gauge the Federal Reserve’s interest rate outlook under the backdrop of tariff uncertainties. There is a general expectation that the Fed will keep rates unchanged next week.
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