Forex News

Silver climbed toward $31 per ounce on Wednesday, approaching its highest levels in six weeks, as US President Donald Trump’s tariff threats fueled demand for safe-haven assets. On Tuesday, Trump indicated that he was considering a 10% tariff on Chinese imports starting February 1, just one day after threatening Mexico and Canada with tariffs of approximately 25%. However, with no action taken yet, there are hopes that the administration may adopt a more cautious stance on tariffs. Silver also remains supported by expectations of further interest rate cuts by the Federal Reserve this year, which could weaken the dollar and boost demand for commodities. Additionally, ongoing supply concerns, particularly in London vaults, and strong industrial demand, especially from manufacturing, continue to strengthen the bullish outlook for silver.

Copper futures fell below $4.30 per pound on Wednesday, sliding for the third straight session as US President Donald Trump threatened China with a 10% tariff, heightening fears of a global trade war. Trump also mentioned considering a 25% tariff on Mexico and Canada, though he refrained from implementing any of these threats into policy. Market sentiment was further dampened by caution ahead of China’s Lunar New Year holiday, as well as upcoming interest rate decisions from the Bank of Japan and the US Federal Reserve. However, there remains some optimism that China will follow through on promises of additional stimulus, with state media reporting that the People’s Bank of China may reduce the reserve requirement ratio for banks later this month.

Japan’s 10-year government bond yield rose above 1.2% on Wednesday, rebounding from two-week lows as expectations grew that the Bank of Japan would raise interest rates this week following hawkish comments from central bank officials. A rate hike would increase Japan’s short-term borrowing costs to 0.5%, the highest level since the 2008 global financial crisis. BOJ Governor Ueda recently indicated that the central bank would consider raising rates if the economy continues to perform well, while Deputy Governor Himino noted that it would be unusual for real interest rates to remain negative once Japan has moved past deflationary pressures. The BOJ is also expected to revise its inflation outlook higher, amid growing expectations that rising wages will help Japan achieve its 2% inflation target sustainably.

The yield on the 10-year US Treasury note steadied around 4.59% on Wednesday after facing pressure in recent sessions as investors pondered US President Donald Trump’s tariff plans. Trump stated on Tuesday that he is considering a 10% tariff on goods imported from China, effective as early as February 1, just one day after threatening Mexico and Canada with tariffs of around 25%. However, none of these threats have been implemented into policy yet, fueling hopes that the administration may adopt a more cautious stance on tariffs, potentially easing inflation concerns. Earlier this month, the benchmark 10-year yield surged to its highest level in over a year, driven by fears that Trump’s "America First" policies and pro-growth approach could spur inflation, possibly hindering the Federal Reserve’s ability to cut rates further. Despite these concerns, markets still expect the Fed to lower rates by July, with an additional rate cut by year-end remaining a possibility.

Top currency losers are Turkish Lira (-0.56%), Japanese Yen (-0.23%), Euro (-0.11%) and British Pound (-0.08%). Gains are led by Dollar Index (0.11%).

Malaysian palm oil futures dipped around 1% to below MYR 4,230 per tonne after solid gains in the prior session, dragged by weak export data. Cargo surveyors noted shipments of Malaysian palm oil products for January 1–20 could shrink 18.2% to 23% from the same period in December. In top consumer India, demand at the start of 2025 may hit a near five-year low as cheaper rival oils dominate. Meantime, global trade concerns added to a bearish mood after reports suggested US President Trump might impose a 10% tariff on Chinese imports starting February, 1. As China is a key consumer of palm oil, heightened US-China trade tensions could disrupt commodity markets, including palm oil. Capping further losses were bets of rising demand ahead of the Lunar New Year and the fasting month in March. On the production side, the Southern Peninsular Palm Oil Millers saw a 10% drop in output for the first half of January. Stocks are also expected to stay below average at 1.7 million tonnes in Q1 2025.

New Zealand's benchmark S&P/NZX 50 index edged 0.1% lower at 13,037 on Wednesday, giving back early gains to mark its third consecutive day of losses. Investor sentiment soured after U.S. President Donald Trump said that his team was discussing a 10% tariff on China as early as Feb. 1, the same day that he previously said Mexico and Canada would face levies of around 25%. Given New Zealand’s close trading ties with China, any developments impacting China’s economy could have a significant effect on the local market. In domestic news, New Zealand’s annual inflation rate was unexpectedly steady at 2% in the fourth quarter of 2024, staying within the Reserve Bank’s target band of 1-3%, which leaves the door wide open for more rate cuts. Among stocks, notable losses were seen from Auckland Intl Airport (-0.9%), Infratil (-1.5%), Fonterra (-0.9%), Spark NZ (-1.5%), and Fletcher Building (-1%).

The Australian dollar stabilized around $0.626 on Wednesday, following heightened volatility in recent sessions, as investors continued to weigh the latest comments from US President Donald Trump. Late on Tuesday, Trump revealed that his team was considering a 10% tariff on Chinese imports starting February 1, raising concerns about a potential trade war. Given the close trading ties between Australia and China, any developments affecting China’s economy could have significant implications for Australian markets. Domestically, traders are closely watching next week’s quarterly inflation report, which could provide critical insights into the future direction of local interest rates. Speculation is growing that the Reserve Bank of Australia may begin cutting rates as early as next month.

Consumer prices in East Timor fell by 0.4% year-on-year in December 2024, quickening from a 0.2% decline in November and marking the second consecutive month of consumer deflation. Costs decreased further for alcohol and tobacco (-3.2% vs -3.8% in November), housing (-0.7% vs -1.0%), furnishings, household equipment, and routine household maintenance (-1.2% vs -1.3%), transport (-2.4% vs -2.4%), and communication (-0.9% vs -0.9%). Meanwhile, food prices rose by 0.1%, significantly easing from a 0.5% gain in November and pointing to the slowest increase in nearly five years. At the same time, inflation remained stable for health (2.3%), recreation and culture (1.9%), and education (2%). On a monthly basis, consumer prices increased by 0.2%, reversing a 0.2% decline in November and noting the first monthly rise since May.

The offshore yuan depreciated past 7.28 per dollar, extending its losses from the previous session, as investors grappled with concerns over U.S. President Donald Trump's trade policies. Late on Tuesday, Trump announced plans to impose an additional 10% tariff on Chinese imports starting February 1, citing that China is supplying fentanyl to Mexico and Canada. While the proposed tariff is significantly lower than the 60% rate Trump had previously threatened, it aligned with the 10% pledge he made as president-elect. The announcement followed a recent phone call between Trump and Chinese President Xi Jinping, during which they discussed trade, fentanyl and other key issues. Earlier in the week, Trump also proposed a 25% tariff on imports from Mexico and Canada, reiterating their roles in enabling undocumented migration and the flow of drugs into the U.S.

The New Zealand dollar depreciated to around $0.565 on Wednesday as investors assessed the latest domestic inflation figures. New Zealand’s annual inflation rate held steady at 2% in the fourth quarter of 2024, slightly higher than expected but still within the Reserve Bank of New Zealand’s target range of 1-3%. On a quarterly basis, the CPI rose by 0.5%, easing slightly from a 0.6% increase in the previous period. The data suggested that price pressures remained largely contained, reinforcing expectations for a 50-bps rate cut at the central bank’s meeting in February. Additionally, U.S. President Donald Trump’s plan of imposing a 10% tariff on Chinese-made goods starting February 1st further weighed on the Kiwi dollar, given China is New Zealand’s largest trading partner.

The Japanese yen steadied around 155.6 per dollar on Wednesday, pausing its recent rally which was fueled by expectations that the Bank of Japan would raise interest rates this week following hawkish remarks from central bank officials. A rate hike would lift Japan’s short-term borrowing costs to 0.5%, the highest level since the 2008 global financial crisis. BOJ Governor Ueda recently indicated that the central bank would consider raising rates if the economy continues to perform well, while Deputy Governor Himino stated that it would be unusual for real interest rates to remain negative once Japan has moved past deflationary pressures. Meanwhile, traders continued to monitor the latest comments from US President Donald Trump, who threatened tariffs on China, Mexico, Canada, and the EU, heightening risks of a global trade war.

Gold rose toward $2,750 per ounce on Wednesday, extending a more than 1% gain from the previous session to reach its highest level since early November of last year. The metal has been supported by a relatively softer US dollar and growing demand for the safe-haven asset, as concerns over trade wars lingered following President Trump's announcement of potential tariff policies. Trump pledged to impose tariffs on the European Union and reiterated his consideration of a 10% tariff on China, following his earlier statement about prospects of imposing hefty levies on Canada and Mexico. Meanwhile, traders continued to assess inflation risks, as Trump’s policies were broadly seen as inflationary, potentially prompting the Federal Reserve to keep interest rates elevated for an extended period to control price pressures. This could dampen gold’s appeal, as higher rates increase the opportunity cost of holding non-yielding assets.

The Shanghai Composite dropped 1% to around 3,210 while the Shenzhen Component tumbled 1.1% to 10,185 on Wednesday, with the former hitting a one-week low after US President Donald Trump said his team was discussing a 10% tariff on goods imported from China that could take effect as early as Feb. 1. Trump’s comments overshadowed a more positive development from Friday, when he had an amicable phone call with Chinese President Xi Jinping, during which they discussed trade and fentanyl, among other topics. At the World Economic Forum, Chinese Vice Premier Ding Xuexiang emphasized that there are no winners in a trade war and called for greater international economic cooperation. Notable losses included Seres Group (-3.8%), ZTE Corp (-1.5%), East Money (-1.5%), Contemporary Amperex (-2.6%), and Fivocom Wireless (-4.4%).

The dollar index held around 108.1 on Wednesday, holding a recent decline amid lingering uncertainty on US President Donald Trump’s tariff plans. Trump indicated on Tuesday that he is considering a 10% tariff on goods imported from China, set to begin on February 1, just one day after threatening Mexico and Canada with tariffs of approximately 25%. However, none of these threats have been turned into policy yet, fueling hopes that the administration may take a more cautious approach to tariffs, which could help mitigate inflation risks. The dollar has been on an upward trajectory since October, driven by concerns that Trump’s "America First" policies and pro-growth stance might lead to higher inflation, potentially preventing the Federal Reserve from implementing further rate cuts. Despite this, markets still expect the Fed to lower rates by July, with the possibility of another reduction later in the year.

Top currency gainers are Afghan Afghani (1.44%), Macanese Pataca (0.57%) and Nepalese Rupee (0.57%). Biggest losers are Georgian Lari (-1.03%), New Taiwan Dollar (-0.38%) and Azerbaijani Manat (-0.29%).

Shares in Hong Kong slipped 319 points or 1.6% to 19,787 in early trade on Wednesday, ending gains in the prior six sessions after US President Trump said he could impose a 10% tariff on all Chinese imports after excluding China from the list of countries he planned to target immediately just a day earlier. The Hang Seng withdrew from its highest level in near four weeks, burdened by broad-based weakness. Still, gains on Wall Street overnight helped limit further losses, as Trump is expected to announce a new investment push for AI, led by big firms including Softbank Group Corp., OpenAI, and Oracle. At home, the annual inflation rate in Hong Kong was at 1.4% in December, keeping unchanged for the third month and staying at its lowest since May. Early laggards included KE Holdings (-3.2%), JD Logistics (-2.6%), and Longfor Group (-1.7%). Meantime, Geely Auto sank 1.8% despite planning to partner with Handal Motor to build a second-phase factory in Indonesia and start operation by Q3.

WTI crude oil futures traded below $76 per barrel on Wednesday, extending losses from recent sessions after US President Donald Trump reiterated his consideration of a 10% tariff on China, a top oil consumer. This amplified trade war concerns, following his statement a day earlier about potentially imposing hefty levies on Canada and Mexico. Markets also continued to assess the implications of Trump's pledges to boost oil production by declaring a national energy emergency to ease permitting, open up acreage, and reverse Biden-era clean energy policies. Meanwhile, recent US sanctions on Russia have disrupted physical oil and tanker markets, offering some carryover support to oil prices. Elsewhere, a winter storm swept across the US Gulf Coast on Tuesday, with North Dakota's oil production falling by 130 thousand to 160 thousand bpd, according to the state's pipeline authority.

The benchmark KOSPI rose 0.7% to around 2,537 points on Wednesday, reversing losses from the previous session, buoyed by Wall Street gains overnight following US President Donald Trump's less aggressive stance on tariffs. Meanwhile, South Korea's Industry Ministry met with businesses Wednesday to address US export risks under Trump’s second term and brief exporters on trade policies. Traders now braced for some major corporate earnings later this week. Among key stock indexes, chip giant SK Hynix and automaker Hyundai Motor advanced 0.2% and 0.7%, respectively, ahead of their earnings result due tomorrow. Notable gains were also seen from LG Energy Solutions (1.6%) and Samsung Biologics (2.8%). On the economic data front, South Korea’s consumer confidence edged up to 91.2 in January 2025 from 88.2 in December, reflecting a modest improvement in economic sentiment.

The Nikkei 225 Index jumped 1.4% to surpass 39,500, while the broader Topix Index gained 0.7% to 2,732 on Wednesday, reaching their highest levels in nearly two weeks and tracking gains on Wall Street overnight. The rally came as US President Donald Trump chose not to impose his tariff threats, offering relief to global markets. Despite the gains, investors remained cautious ahead of the Bank of Japan's upcoming monetary policy decision this week, with BOJ officials suggesting the possibility of a rate hike. Nearly all sectors participated in the rally, with notable gains from key index heavyweights, including Disco (+5.3%), Advantest (+3.4%), Fujikura (+4.7%), Nintendo (+2.5%), and Toyota Motor (+1.2%). SoftBank Group also soared 7.5% after Trump announced a significant AI infrastructure investment involving the company.