Asian stocks dropped on Wednesday while the U.S. dollar hovered near multi-year lows as investors grew increasingly cautious over the direction of U.S. monetary policy, the looming tariff deadline set by Donald Trump, and ongoing global trade deal uncertainties.

🔹 Investors are bracing for the Federal Reserve’s next move, with all eyes on Thursday’s U.S. jobs report, which could heavily influence the Fed’s interest rate decision.

🔹 Trump ruled out extending the deadline for trade deals, increasing pressure on countries like Japan and India. While he expressed doubts about a deal with Japan, he remained optimistic about reaching one with India in time.

📊 Regional Stock Declines

The MSCI index of Asia-Pacific shares outside Japan fell 0.23%, pulling back from last week's record highs.

Japan’s Nikkei 225 slid 0.78%, weighed down by losses in tech stocks.

Tech-heavy markets such as Taiwan’s Taiex (-0.31%) and South Korea’s Kospi (-0.87%) also followed the downward trend after U.S. tech shares slipped following strong June gains.

📉 Dollar Weakens, Euro and Yen Hold Steady

The dollar continued to slide, nearing its lowest level since March 2022. The U.S. dollar index dropped to 96.649, its weakest reading in over three years.

The euro held at $1.1799, while the yen remained steady at 143.52 per dollar.

Economists warn that if Thursday’s labor report disappoints, markets may further adjust expectations toward a more dovish Fed, putting even more pressure on the U.S. currency.

📉 Powell Waits, Trump Pushes

Fed Chair Jerome Powell said the central bank may “wait and see” how tariffs affect inflation before easing monetary policy.

Markets are currently pricing in a total of about 64 basis points in rate cuts for 2025, with just a 21% chance of a rate cut in July.

Carol Kong of CBA said that a combination of disappointing data, the newly passed “One Big Beautiful Bill,” and trade uncertainty could further undermine confidence in the U.S. economy and keep the dollar under pressure.

💸 Trump’s $3.3 Trillion Fiscal Plan Raises Debt Fears

Attention is also turning to Trump’s massive tax-and-spending package, expected to increase U.S. federal debt by $3.3 trillion. The bill narrowly passed the Senate and is now heading to the House of Representatives.

Despite the fiscal concerns, bond markets barely reacted, with the 10-year Treasury yield standing at 4.245% after hitting a two-month low in the prior session.

🪙 Gold Pulls Back, But Remains Strong

In commodities, gold dropped to $3,332.19 per ounce, following a 1% gain in the previous session.

So far in 2025, the metal has risen 27% as investors flock to safe-haven assets amid macroeconomic uncertainty.




#USDOLLAR , #Asia , #FederalReserve , #MarketVolatility , #stockmarket

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