Most Asian currencies gained on Tuesday, stabilizing after sharp overnight losses triggered by U.S. President Donald Trump’s announcement of steep new trade tariffs, while the Australian dollar jumped after the central bank unexpectedly held interest rates steady.
Sentiment improved slightly after Trump signaled flexibility on the August 1 deadline, saying that the U.S. remained open to further negotiations.
The US Dollar Index, which measures the greenback against a basket of major currencies, fell 0.2% in Asia hours after sharp gains overnight. US Dollar Index Futures were also trading 0.2% lower.
RBA unexpectedly holds rate steady; Aussie dollar jumps
The Reserve Bank of Australia held interest rates unchanged at 3.85% on Tuesday, defying market expectations of a 25 basis point cut.
The central bank said it preferred to wait for clearer signs that inflation was easing. It also flagged global economic risks and uncertainty over the full impact of U.S. trade tariffs.
Although inflation in Australia has fallen sharply from its 2022 peak, the central bank flagged slightly stronger-than-expected recent CPI data as a reason for caution.
The Australian dollar’s AUD/USD pair jumped 0.8%, recovering most of its overnight losses.
Japanese yen, S. Korean won tumbled overnight
U.S. President Donald Trump on Monday began sending tariff letters, notifying 14 countries that sharply higher duties will take effect on August 1.
The list included major U.S. trading partners such as Japan and South Korea, along with smaller exporters like Serbia, Thailand, and Tunisia.
