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Asian shares fall, dollar struggles following Trump's tariff backlash

Asian shares fall, dollar struggles following Trump's tariff backlash

Asian shares declined on Tuesday. U.S. Futures rose, however, after President Donald Trump postponed his threatened 50% duty on European Union shipments. The dollar, meanwhile, was heading for its fifth consecutive monthly loss.

Early in the session in Japan, yields for super-long government debts fell, retreating from all-time highs after last week's massive selloff of the bonds.

The U.S. markets were closed for the holiday on Monday, which made for thin overnight trading. Investors clung to the lingering optimism that Trump had reversed his decision to impose tariffs of 50% on EU imports next month.

In Asia, Nasdaq Futures rose by 1.26% while S&P500 Futures also increased by 1.11%. FTSE futures rose by 0.94%. UK markets were closed as well on Monday.

Tony Sycamore is a market analyst for IG. He said, "It was a good night for risk assets after Trump delayed (EU tariffs)."

The earnings report from Nvidia will be the focus of attention this week.

Nvidia is due to release its results on Wednesday. The AI darling will likely report a 65.9% increase in revenue for the first quarter.

The broadest MSCI index of Asia-Pacific stocks outside Japan fell by 0.17% while Japan's Nikkei also dropped 0.15%.

Shanghai Composite Index showed little change. China's blue-chip CSI300 index fell 0.06%. Hong Kong's Hang Seng Index dipped 0.1%.

Investors will be looking for clues about the future of U.S. interest rates by focusing on Friday's U.S. PCE core price index and speeches from Federal Reserve policymakers.

The Bank of Japan's (BOJ) annual conference and its affiliated think-tank began on Tuesday. This year, the gathering of global central banks in Tokyo will focus on stagnant economic growth and sticky prices.

The dollar was struggling to gain traction in currencies and was on track for its fifth consecutive month of losses against a basket currency, marking the longest losing streak since 2017.

The euro was near its one-month high of $1.14035 while the yen rose by nearly 0.5% to 142.18 dollars.

Trump's chaotic policies on trade and worries about the worsening U.S. debt outlook have undermined sentiment toward U.S. assets, and subsequently been a drag for the dollar.

David Meier is an economist with Julius Baer. He said that a U.S. Dollar regime change may be coming in the future, after the recent peak.

The twin deficits, coupled with the US's erratic policymaking and tense fiscal environment, suggests that the path of least resistance is a weaker USD.

Gold prices have reached record levels this year as investors seek alternatives to the dollar, which has lost some of its appeal as a safe-haven.

The last time it traded, the price was 0.28% lower. It is currently $3,332.91 per ounce.

Oil prices fell on Tuesday, as investors weighed up the possibility that OPEC+ would decide to increase crude oil production at a meeting this week.

Brent crude futures fell 0.1% to $64.67 per barrel while U.S. West Texas Intermediate Crude dropped 0.16% to $60.43 per barrel.

(source: Reuters)