SINGAPORE: Asian stocks slipped on Wednesday (Jul 2) and the dollar languished near three-and-a-half-year lows as investors weighed the prospect of US interest rate cuts and the scramble for trade deals ahead of President Donald Trump’s Jul 9 deadline for tariffs.
Trump said he was not considering extending the Jul 9 deadline for countries to negotiate trade deals with the United States, and cast doubts again that an agreement could be reached with Japan, although he expects a deal with India.
MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.23 per cent in early trading, inching away from the November 2021 top it touched last week. Japan’s Nikkei fell 0.78 per cent, dragged by tech stocks.
Tech-heavy Taiwan stocks and South Korea’s Kospi Index also fell after US tech firms were hit hard following a strong rally in June.
Data on Tuesday showed the US labour market remained resilient with a rise in job openings for May, sharpening the focus on the payrolls report due on Thursday as investors try to gauge when the Federal Reserve is likely to cut rates next.
Fed Chair Jerome Powell, under fire from Trump to cut rates immediately, reiterated that the US central bank plans to “wait and learn more” about the impact of tariffs on inflation before lowering interest rates.
Traders are pricing in 64 basis points of cuts this year from the Fed with the odds of a move in July at 21 per cent.
That maintained a bearish bias on the dollar. The euro last bought US$1.1793, just below the three-and-half-year high it touched on Tuesday. The yen was steady at 143.52 per dollar.
“Any disappointing economic data can prompt further dovish repricing of FOMC rate cuts and another round of USD selling,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia.
“The ‘One Big Beautiful Bill’ Act (OBBBA) and trade developments also have the potential to further weaken the USD if they undermine investor confidence about the US economy.”
