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As trade uncertainty increases, Asian stocks are up and the dollar is softening.

The dollar dipped to six-week lows on Wednesday as traders prepared for the impending increase in U.S. tariffs on steel and aluminum. This is the latest chapter of the trade war that has roiled the markets throughout the year.

South Korea's stock market and currency rose as the liberal presidential candidate Lee Jae Myung won his election. This raised hopes for a rapid economic stimulus, reforms of the markets and an end to policy uncertainty.

The benchmark KOSPI rose more than 2%, reaching its highest level since August 2024. The MSCI broadest Asia-Pacific share index outside Japan was 0.6% higher.

The Nikkei soared 0.8% in Japan, while Taiwanese stocks rose 1.6% overnight after Nvidia, the artificial intelligence giant that boosted U.S. stock prices overnight.

The data released on Wednesday shows that U.S. jobs opened in April but layoffs increased, which indicates a slower labour market due to tariffs affecting the economy outlook.

Investors have been watching a potential phone call between U.S. president Donald Trump and Chinese leader Xi Jinping this week, as tensions simmer between the two world's largest economies.

Trump accused China on Friday of violating the Geneva Agreement to reduce tariffs and trade barriers. Beijing has said that it will protect its interests, and that this accusation is unfounded.

Early trading in China saw little change, with the blue-chip index only up 0.09%. Hong Kong's Hang Seng Index rose by 0.27%.

The Trump-Xi negotiations remain the focus of attention, even though markets may have become numb to headlines about trade. "A grand deal seems unlikely, but any escalation may still cause a bout risk aversion," Charu Chanana said, chief investment strategy at Saxo, Singapore.

The pace and lack of progress in trade negotiations has also been a focus. The deadline for U.S. trade partners to submit proposals for deals in order to avoid Trump's "Liberation Day", hefty tariffs, is Wednesday.

Trump has signed an executive order that will take effect at 0401 GMT, Wednesday. This follows his announcement last week to increase the 25% tariff on imports of steel and aluminum from March to 50%.

Thierry Wizman is a global FX & Rates Strategist at Macquarie. He said: "We think that the steel & aluminum tariffs are a good example of other strategic tariffs which are likely to'stick.'" "There's little incentive for a U.S. Dollar rally to take root."

DOLLAR WEAKNESS

Investors have fled U.S. assets in search of safe havens this year, including gold, as they anticipate trade uncertainty to have a negative impact on the global economy.

The Organisation for Economic Cooperation and Development (OECD) has revised its March estimates, due mainly to the impact of the Trump administration’s trade war.

On Wednesday, the dollar was in a downward trend. It fell 0.17% to 143.72 yen and 0.1% to 0.8227 Swiss Franc. The euro increased by 0.15%, to $1.1388.

The dollar index (which measures the U.S. currency against six major currencies) was 99.11 on Monday, not too far away from the six-weeks low of 98.58 that was reached the previous day. The index has fallen 8.5% in the past year.

Oil prices fell in commodities due to a loosening of the supply-demand equilibrium following an increase in OPEC+ production and lingering worries about global economic prospects because of tariff tensions.

Brent crude futures fell 0.06%, to $65.59 per barrel. U.S. West Texas Intermediate crude crude dropped 0.09%, to $63.35 a barrel.

The gold price rose by 0.5%, to $3,369.59 an ounce. This brings its year-to-date gains to a staggering 28%, thanks to safe-haven flows. (Reporting and editing by Jamie Freed in Singapore, Ankur Banerjee)

(source: Reuters)