The US dollar gained ground across Asian markets on Tuesday, buoyed by renewed optimism over potential international trade agreements aimed at circumventing the aggressive tariff policies of former US President Donald Trump. This resurgence in dollar strength comes at a critical time when global investors are navigating geopolitical tensions, fluctuating commodity prices, and a pivotal monetary policy decision from the US Federal Reserve.
The greenback’s rise was largely fueled by encouraging signals from Washington, particularly remarks by US Treasury Secretary Scott Bessent. Speaking on CNBC, Bessent revealed that the White House had received positive trade proposals from at least 17 countries. Among the most significant is the potential for a breakthrough in negotiations with China, which currently faces a staggering 145% tariff on its exports to the US.
Bessent’s comments lifted investor sentiment, with market participants hopeful that diplomatic dialogue could dial back Trump-era tariffs that have unsettled global trade for years. “There could be substantial progress in the coming weeks,” Bessent said, noting that several countries have begun revaluing their currencies as part of their negotiation tactics with the US.
This backdrop contributed to a rally in Asian currencies. Taiwan’s dollar surged by roughly 7% in April, while other regional currencies — including the South Korean won, Malaysian ringgit, Indian rupee, and Thai baht — also posted notable gains. Despite these developments, the US dollar remained stable against traditional counterparts like the Japanese yen, euro, and British pound.
Analysts suggest that the currency movements may be part of a broader strategy to appease the US administration. Chris Weston of Pepperstone noted that traditionally weaker Asian currencies might now be appreciating intentionally. “These countries may be using currency appreciation as a bargaining chip in the trade negotiations,” Weston said, indicating a potentially major shift in trade and monetary diplomacy.
Equity markets responded in mixed fashion to the developments. Key Asian indices, including the Hang Seng in Hong Kong and the Shanghai Composite, both closed higher as traders returned from an extended holiday break. London’s FTSE 100 also saw a modest rise of 0.2%. Meanwhile, Sydney, Mumbai, and European bourses in Paris and Frankfurt slipped into negative territory, reflecting ongoing caution.
Wall Street’s momentum also cooled, with the S&P 500 breaking a nine-day winning streak. Investor anxiety was further stoked by Trump’s threat to impose 100% tariffs on foreign-made films — a move that sent shares of international media companies tumbling.
All eyes now turn to the US Federal Reserve, which is set to announce its latest interest rate decision on Wednesday. Market expectations largely anticipate a hold on rates, though President Trump has continued to push for aggressive rate cuts. Despite a mild contraction in US GDP during the first quarter, robust employment figures and strong service sector data point to underlying economic resilience.
Stephen Innes of SPI Asset Management noted that market sentiment has shifted. “Soft data had baked in a Fed pivot, but the ensuing hard data prints got bond desks slashing their rate-cut tickets,” he said. Innes added that Fed Chair Jerome Powell is likely to maintain a hawkish stance, especially with the threat of tariff-driven inflation looming.
Meanwhile, oil prices rebounded, recovering from sharp losses triggered by an OPEC+ decision to raise production. Brent crude rose 2.3% to $61.59 per barrel, while West Texas Intermediate also gained 2.3% to $58.43. The increase followed Saudi Arabia, Russia, and other OPEC+ members announcing a collective output hike of 411,000 barrels per day for June.
- Market Snapshot as of 08:10 GMT:
Hang Seng Index (Hong Kong): +0.7% at 22,662.71
Shanghai Composite: +1.1% at 3,316.11
FTSE 100 (London): +0.2% at 8,617.32
Nikkei 225 (Tokyo): Closed for holiday
Euro/USD: $1.1344 (+0.22%)
GBP/USD: $1.3327 (+0.23%)
USD/JPY: 143.25 (-0.47%)
Brent Crude: $61.59 (+2.3%)
WTI Crude: $58.43 (+2.3%)
Dow Jones (New York): +0.2% at 41,218.83
As traders weigh trade optimism against economic uncertainties and the Fed’s monetary policy direction, the coming days are set to be pivotal for global financial markets.