Asian shares slipped as investors weighed US rate cut odds

Asian shares slipped Wednesday, while the dollar hovered near its weakest levels in over three years as traders weighed the odds of rate cuts in the United States and raced to secure trade agreements before Trump’s July 9 tariff deadline.

Trump had mentioned that he would not extend that deadline for nations to strike new trade deals. He again cast doubt on reaching a pact with Japan but expressed confidence that a trade agreement with India could be finalized in time.

MSCI’s Asia-Pacific index of stocks outside Japan dipped 0.23% in early trade, pulling back from the record high reached last week. In Tokyo, the Nikkei 225 reduced 0.78%, weighed down by losses in technology stocks.

In Taiwan, the tech-heavy Taiex index has retreated by 0.31%, and South Korea’s Kospi has also lost ground by 0.87% at press time, mirroring a pullback in U.S. technology firms that had enjoyed strong gains in June.

On Tuesday, data showed U.S. job openings climbed in May, underscoring the resilience of the labor market. Investors are now focused on the closely watched payrolls report, which is due to be released on Thursday. This report could offer fresh clues about the timing of Federal Reserve rate cuts.

The central bank wants to wait and see how tariffs will affect inflation

Jerome Powell, facing pressure from President Trump to lower rates right away, mentioned that the central bank may “wait and learn more” about how tariffs might affect inflation before easing policy.

Markets currently price in about 64 basis points of rate cuts in 2025, with just a 21% chance of a reduction in July. That outlook has kept downward pressure on the greenback.

The euro was last trading at $1.1799, right under Tuesday’s three-and-a-half-year peak. The yen held steady at $143.52 a dollar.

“Any disappointing economic data can prompt further dovish repricing of FOMC rate cuts and another round of USD selling,” Carol Kong from Commonwealth Bank of Australia stated. She added that the newly passed “One Big Beautiful Bill” Act, as well as ongoing trade developments, could further undermine confidence in the US economy and weaken the dollar.

Attention has also turned to Trump’s hefty tax and spending package, which analysts estimate will incur $3.3 trillion in federal debt. The measure passed the Senate by the slimmest of margins and now moves to the House of Representatives to get an approval.

Despite raising fiscal concerns, bond markets barely flinched. The yield on the US 10-year Treasury note stood at 4.245%, after touching a 2 months low during the last session.

Rising fiscal pressures, coupled with trade uncertainties along with questions about the US interest rate path, have driven investors to seek alternatives to American assets. Many fear that erratic trade policies may dent U.S. growth prospects.

Dollar is down over 10% while gold eased to $3,332.19 an ounce

As a result, the dollar has slid more than 10% so far this year, marking its worst performance in the first half of a year since 70s. The dollar index that tracks the greenback against six other currencies stood around 96.649. It is the lowest level since March of 2022.

In commodity markets, gold eased at $3,332.19 an ounce as it jumped 1 percent in the prior session. The metal has rallied 27% in 2025 amid safe-haven buying.

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