The dollar struggles due to Trump’s u-turn while Asian shares slide down

Asian stocks slipped on Tuesday as the dollar headed for a fifth straight monthly loss, but Wall Street futures gained after United States President Donald Trump pushed back his plan to slap 50% tariffs on EU goods.

The mixed mood left the region softer overall. MSCI’s broad index of Asia-Pacific shares outside Japan eased 0.17 percent, while Japan’s Nikkei shed 0.15 percent. Mainland China was more or less flat. The CSI300 inched 0.06 percent lower, and the Shanghai Composite hardly moved. Hong Kong’s Hang Seng edged down 0.1 percent.

A holiday in U.S. markets on Monday kept trading thin overnight. Still, investors welcomed Trump’s late reversal, which moved the tariff deadline to 9 July instead of next month. The change helped lift the risk appetite in future markets. Nasdaq contracts rose 1.26 percent in Asian hours, S&P 500 futures gained 1.11 percent, and FTSE futures picked up 0.94 percent. London was also shut on Monday.

“It was a better night for risk assets, following Trump deferring (EU tariffs) back to July 9,” said Tony Sycamore, market analyst at IG. “What I think probably is now the main driver for this week is we’ve got the month-end rebalancing flows, which should start to kick in anytime soon… Nvidia’s earnings report again is going to be front and centre in terms of what’s going on there.”

Chipmaker Nvidia’s reports are due on Wednesday and are expected to show a 65.9 percent jump in first-quarter revenue, keeping focus on the artificial-intelligence boom that has driven its share price.

In Japan, yields on super-long government bonds fell early in the day, retreating from the record highs hit during last week’s heavy selling.

Traders are bracing for upcoming market movements

Several Federal Reserve policymakers will give their speeches this week, along with Friday’s U.S. core PCE price index. In Tokyo, a two-day annual conference organized by the Bank of Japan and its think tank has already begun on Tuesday. Global central bankers gathering there are expected to discuss economic growth and inflation.

Currency markets showed a steady drift away from the dollar. The greenback was on course for a fifth straight monthly loss, the longest slide since 2017. The euro hovered near a one-month high at $1.14035. The yen strengthened nearly 0.5 percent to ¥142.18 per dollar.

Trump’s unpredictable trade moves and worries over the US deficit have eroded confidence in American assets, weighing on the dollar. “A U.S. dollar regime change could be in the making in the long term after it appears to have peaked recently,” said David Meier, economist at Julius Baer.

“Erratic U.S. policymaking, the tense fiscal situation, and large external indebtedness, against the backdrop of the twin deficit, suggest that a weaker USD is the route of least resistance,” David added.

As the dollar loses some of its safe-haven appeal, investors have looked elsewhere. Gold, which touched record highs earlier this year, last traded 0.28 percent lower at $3,332.91 an ounce.

Oil prices slipped as traders weighed whether OPEC+ would agree to raise output at a meeting this week. Brent crude futures eased 0.1 percent to $64.67 a barrel, while U.S. West Texas Intermediate moved down 0.16 percent to $61.43 a barrel.