Asia Open: Tariff risks delayed, US dollar dips
Markets found a renewed sense of relief overnight, as initial worries over the implementation of US reciprocal tariffs this week did not materialise.
Reciprocal tariff risks delayed for now
Markets found a renewed sense of relief overnight, as initial worries over the implementation of US reciprocal tariffs this week did not materialise. Instead, US President Donald Trump opted for more time to kickstart an investigation into the levies imposed on US goods by other trading partners before formulating a response. Such dynamics seems different from the “strike first, talk later” approach seen in the 2018 trade war, with his renewed strategy offering trading partners some runway for negotiations and room for consensus to be reached.
The recent talks between India and the US highlight the potential for cooperation, with commitments on defense and energy purchases aimed at reducing the trade deficit. These agreements, along with impending trade deals, could set a precedent for other countries to follow suit and warm up to the US.
The delay in tariff risks offered a lift to US equity markets overnight (DJIA +0.77%, S&P 500 +1.04%, Nasdaq +1.50%). The US dollar dipped 0.8% given its sensitivity to tariff developments, while Treasury yields retreated from its post-consumer price index (CPI) spike. Overnight, US headline producer prices were generally taken in stride as key pricing components feeding into the core Personal Consumption Expenditures (PCE) price index signalled little cause for concern and minimal need for adjustments to current rate expectations.
Asia Open
The Asian session saw a general drift higher, with the ASX +0.53%, NZX + 0.45% and KOSPI +0.27% at the time of writing. However, Japan’s Nikkei (-0.32%) lagged, likely pressured by a stronger yen. There are much tailwinds for risk sentiments in the region to tap on, with the positive handover in Wall Street, weaker US dollar and lower Treasury yields. The breakdown of the US dollar below a key trendline support puts a near-term bearish trend in place for now, suggesting room for the recent retracement to extend further.
Aside, the USD/JPY looks on track to follow through with its near-term lower-high narrative, as the pair retreated from a downward trendline resistance around the 154.84 level. Its daily relative strength index (RSI) has struggled to cross above its midline following a retest. Ahead, sellers may set its sight on the 151.96 level of support next, before eyeing for the 149.11 level where a lower trendline support stands. Tariff delays may offer room for positive trade developments, which may weigh on the US dollar, while strong US inflation data have been shrugged off for now.
The AUD/USD has also found room for some recovery, following through with a bullish divergence on RSI while its daily moving average convergence/divergence (MACD) heads into positive territory. Buyers may eye for the 0.640 level, where a horizontal support-turned-resistance stands. While tariff relief offers some near-term upside, a sustained reversal of the broader downtrend still needs conviction, especially given the pair’s sensitivity to China’s economy, which remains highly vulnerable to US trade actions.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Act on share opportunities today
Go long or short on thousands of international stocks with spread bets and CFDs.
- Get full exposure for a comparatively small deposit
- Trade on spreads from just 0.1%
- Get greater order book visibility with direct market access
See opportunity on a stock?
Try a risk-free trade in your demo account, and see whether you’re on to something.
- Log in to your demo
- Take your position
- See whether your hunch pays off
See opportunity on a stock?
Don’t miss your chance – upgrade to a live account to take advantage.
- Trade a huge range of popular stocks
- Analyse and deal seamlessly on fast, intuitive charts
- See and react to breaking news in-platform
See opportunity on a stock?
Don’t miss your chance. Log in to take advantage while conditions prevail.
Live prices on most popular markets
- Equities
- Indices
- Forex
- Commodities
Prices above are subject to our website terms and agreements. Prices are indicative only. All share prices are delayed by at least 15 minutes.
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
