Asian currencies strengthened while the U.S. dollar hovered at a four-month low following tariff concessions on Canada and Mexico.
However, market sentiment remained fragile as President Donald Trump maintained a 20% tariff on Chinese imports, prompting retaliation from Beijing.
Investors assessed China’s pledges for additional stimulus measures announced at a high-level government meeting while awaiting key U.S. labor data.
The Chinese yuan increased, and the Japanese yen stabilised after recent safe-haven gains. Meanwhile, risk-sensitive Asian currencies, including the Australian dollar and South Korean won, saw an uptick.
Dollar at 4-Month Low on Tariff Concessions; Payroll Data in Focus
The dollar index and its futures steadied in Asian trading after slipping to their lowest levels since early November on Wednesday.
The decline followed Trump’s decision to grant a one-month exemption for U.S. automakers from tariffs on Canada and Mexico, with reports suggesting a potential exemption for agricultural goods. This fueled speculation that the tariff agenda may be less disruptive than initially feared, boosting risk appetite and reducing demand for the dollar.
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Additional pressure on the greenback came from a stronger euro, as Germany announced an ambitious fiscal stimulus plan to support local economic growth.
Markets now focus on U.S. interest rate signals, with February’s nonfarm payroll data due on Friday. Continued strength in the labor market could give the Federal Reserve more leeway to maintain higher interest rates, which would support the dollar.
