Asian stock markets edged lower while the USD remained near a three-year low, as investors considered the possibility of the U.S. Federal Reserve (Fed) cutting interest rates and racing to finalize trade agreements before the July 9 tariff deadline.
MAIN CONTENT
Asian stocks fell amid concerns over trade policy and Fed developments.
The Fed is considering the impact of tariffs on inflation before deciding to cut interest rates.
The USD is at a multi-year low, putting downward pressure on the greenback and increasing the appeal of gold.
How does the Asian stock market react to trade tensions and exchange rate policy?
The MSCI Asia-Pacific index excluding Japan fell 0.23% in the morning session, pulling back from last week's record high.
In Tokyo, the Nikkei 225 index fell 0.78% due to declines in technology stocks. Taiwan's Taiex lost 0.31%, while South Korea's Kospi fell 0.87% due to the drag from U.S. technology stocks in June.
U.S. employment data for May shows that job numbers continue to rise, reinforcing a strong labor market ahead of the payroll report due on Thursday. This report is seen as crucial for analysts to predict when the Fed will cut interest rates.
What is the Fed's view on the impact of tariffs on inflation?
Fed Chairman Jerome Powell, under pressure from President Trump to cut interest rates immediately, emphasized that the central bank will 'wait and see' the impact of tariffs on inflation before adjusting monetary policy.
A thorough assessment of the impact of tariffs on prices is necessary to avoid prematurely lowering interest rates, which poses risks to the economy.
Jerome Powell, Fed Chairman, June 2025
Currently, the market predicts about 64 basis points for the possibility of an interest rate cut in 2025, but only a 21% chance of a rate cut in July. This puts downward pressure on the USD.
What is the situation of the USD and gold in the current economic context?
The USD remains near its lowest level in over three years as the index measuring the strength of the greenback stands at 96.649, the lowest since March 2022. The EUR trades around 1.1799 USD, near a three-and-a-half year high, while the Yen stabilizes at 143.52 Yen/USD.
Carol Kong, Chief Strategist at Commonwealth Bank of Australia, commented that the weakness of the USD could continue if U.S. economic data does not meet expectations, combined with the uncertain impact of trade policy and a large budget package that could undermine confidence in U.S. economic growth.
The budget package and uncertain trade policies are undermining confidence in the U.S. economy, thereby exerting downward pressure on the USD.
Carol Kong, Chief Strategist at Commonwealth Bank of Australia, June 2025
In commodity markets, gold prices dipped slightly to $3,332.19/ounce after rising 1% in the previous session. Gold has increased by 27% in 2025 due to the trend of buying safe-haven assets.
How do U.S. spending policies and public debt affect financial markets?
President Trump's large spending and tax package is estimated to add about $3.3 trillion to the national federal debt. Despite rising fiscal concerns, the bond market has remained relatively stable, with the yield on 10-year U.S. Treasury bonds standing at 4.245% after hitting a two-month low in the previous session.
Financial pressures, coupled with trade instability and interest rate policies, are prompting investors to seek alternative assets outside the U.S., fearing that trade policies could undermine the growth prospects of the world's largest economy.
What factors are currently driving exchange rate fluctuations and technology stocks?
The recent upward adjustment of U.S. technology stocks in June has created strong momentum. However, risk pressures from tariffs and the potential for Fed interest rate cuts have led indices like Taiex, Kospi, and Nikkei to adjust downward.
At the same time, urgent trade negotiations ahead of the July 9 deadline show few signs of easing, making investors more cautious amid market volatility.
Real-life examples of the impact of trade tensions on the markets
The MSCI Asia-Pacific index fell 0.23%, pulling back from record highs, reflecting cautious sentiment. Nikkei 225 (Japan) down 0.78% influenced by weak tech stocks. Taiex (Taiwan) down 0.31% due to the impact from U.S. technology markets. Kospi (South Korea) down 0.87% due to trade and Fed concerns.
Frequently asked questions
Is the Fed currently inclined to cut interest rates immediately?
The Fed is adopting a cautious stance, prioritizing observation of the impact of tariffs on inflation before cutting interest rates. (According to Jerome Powell's statement, June 2025)Why is the USD at its lowest level in years?
Downward pressure due to the prospect of interest rate cuts and a large budget package undermining confidence in the U.S. economy. (Carol Kong, Commonwealth Bank of Australia)How do tariffs affect the Asian stock market?
Creating instability and causing a slight decline in technology stocks and regional stock indices in the second quarter of 2025.How did gold prices fluctuate in 2025?
Gold prices increased by 27% due to the trend of buying safe-haven assets as markets became volatile and the USD weakened.How does U.S. spending affect financial markets?
Putting upward pressure on public debt and causing investors to shift to assets outside the U.S. due to concerns over unstable economic growth.
Source: https://tintucbitcoin.com/bitcoin-giam-usd-yeu-vi-kinh-te-my/
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