Asian currencies showed little movement on Monday as trading volumes remained low due to holidays in key markets like China and Japan. Investors stayed cautious amid ongoing fears about U.S. tariffs and tensions in the U.S.-China trade war. Meanwhile, the Australian dollar gained ground following the Labor party’s decisive win in the 2025 elections.
The U.S. dollar dipped slightly but held onto some of last week’s gains after data revealed the American job market remained strong despite economic and trade challenges.
With China, Japan, and several other countries observing holidays, Asian trading activity was subdued. The Japanese yen strengthened after losing value last week, with the USD/JPY exchange rate falling by 0.5%.
The South Korean won edged up slightly, with USD/KRW rising 0.1%, while the Singapore dollar gained strength as USDSGD dropped 0.3%.
Taiwan’s dollar stood out, plunging 3.2% against the U.S. dollar. This reflected growing optimism about Taiwan’s economy, boosted by positive remarks on U.S.-China trade talks — crucial for Taiwan, which is closely linked to both economies.
The Chinese yuan’s offshore USDCNH rate stayed flat but remained near recent lows. China had signaled openness to trade discussions with the U.S. last week, contributing to a recent sharp decline in the yuan.
Australian Dollar Strengthens After Labor’s Election Victory
The Australian dollar (AUD/USD) rose 0.3% on Monday after the Labor party nearly swept the national elections over the weekend.
Prime Minister Anthony Albanese secured a second consecutive term, a feat not achieved by an Australian PM in 20 years. This outcome allows Labor to continue its focus on social support and government subsidies.
This political stability boosted the Aussie, along with comments from Treasurer Jim Chalmers emphasizing the government’s intent to manage U.S. trade tensions while supporting Australia’s economy.
The election results come just weeks before the Reserve Bank of Australia’s next policy meeting, where interest rates are widely expected to remain steady — another factor supporting the Australian dollar.
U.S. Dollar Pulls Back on Trade and Economic Uncertainty
The dollar index fell 0.3% during Asian trading hours, retreating slightly after gaining 0.5% the previous week.
Last Friday’s stronger-than-expected U.S. nonfarm payrolls report had supported the dollar by showing the labor market’s resilience amid trade and economic pressures.
However, uncertainty around U.S. tariffs weighed on the greenback. President Donald Trump stated over the weekend that he had no immediate plans to engage directly with Chinese President Xi Jinping, despite ongoing preparations for new trade agreements with other nations and some dialogues with China.
The possibility of a U.S.-China trade deal remains the biggest uncertainty for markets. The two countries have been locked in a bitter trade conflict, exchanging tariffs through April, and investors remain cautious about any developments.
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