Dollar Slump Offers Reprieve for Asian Currencies: Markets Wrap

(Bloomberg) — Asian equities look mixed after Wall Street rallied for a second day. Pressure eased on the region’s currencies after a report that President-elect Donald Trump’s proposed tariff plan will be watered down.

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An index of dollar strength fell as much as 1% Monday after the Washington Post reported that Trump aides were exploring tariffs that only cover critical imports. Trump then denied the report, leading the currency to pare losses to 0.6%, its worst day since November.

Sydney shares edged higher, while equity futures showed heathy gains for Tokyo shares and a decline in Hong Kong’s. In the US, while dip buying fueled tech gains in the S&P 500’s most-influential group, the majority of the benchmark’s shares retreated. Nvidia Corp. hit a record high ahead of chief Jensen Huang’s speech.

The dollar moves offer a reprieve for Asian currencies after a gauge hit its lowest in almost two decades against the greenback on Monday. Traders are concerned about the the impact of Trump’s proposed tariffs, which could threaten potential Federal Reserve interest rate cuts and US-China relations.

The S&P 500 rose 0.6%. The Nasdaq 100 added 1.1%. The Dow Jones Industrial Average was little changed. American Airlines Group Inc. rallied on a trio of analyst upgrades. Citigroup Inc. also jumped on a bullish call. Tencent Holdings Ltd. depositary receipts slid as the US added company to its Chinese military blacklist.

The past two days’ recovery “shows just how strong the ‘buy the dip’ mentality still is,” said Mark Hackett at Nationwide. “Investors continue to lean heavily on tech. Looking ahead, 2025 won’t be a year for easy double-digit gains by solely investing in the S&P 500. Success in this market will require more discipline and creativity from investors.”

The yield on 10-year Treasuries rose three basis points to 4.63%. Bitcoin topped $100,000. Oil halted a five-session rally.

The Canadian dollar advanced after Prime Minister Justin Trudeau announced his resignation as head of the Liberal Party, triggering a contest to replace him.

In Asia, China reaffirmed its support for the yuan after the currency’s slide last week fanned speculation policymakers would allow it to depreciate faster. The People’s Bank of China set its daily reference rate stronger than the line of 7.2 per dollar, defying speculation it would weaken the so-called fixing.

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The yen slid the most among its major peers as traders in Tokyo returned from the holiday season. The Japanese currency weakened as much as 0.4% to 157.83 per dollar on Monday in Tokyo as traders reacted to strong US data released during the holiday last week. The yen may continue to weaken ahead of US jobs data on Friday, according to strategists.

Friday’s report is expected to show employers tempered hiring to wrap up a year of moderating yet still-healthy labor market. The data is unlikely to alter the view of Fed officials that they can slow the pace of rate cuts amid a durable economy and inflation that’s dissipating only gradually.

Fed Governor Lisa Cook said Monday that policymakers can proceed more cautiously amid a sturdy labor market and lingering inflation pressures.

Corporate Highlights:

Advanced Micro Devices Inc., the second-biggest maker of computer processors, said its chips will be used by Dell Technologies Inc. for the first time in PCs sold to businesses.
Dell Technologies Inc. is re-branding its PCs in a manner reminiscent of Apple Inc.’s naming conventions in an effort by the computer maker to spur demand.
Qualcomm Inc. introduced new chips designed to power personal computers capable of running the latest artificial intelligence software yet cost as little as $600.
Nippon Steel Corp. and United States Steel Corp. jointly filed a pair of lawsuits in a last-ditch effort to preserve their planned merger, which was blocked last week by President Joe Biden.
Uber Technologies Inc. said it entered into an accelerated share repurchase agreement with Bank of America to repurchase $1.5 billion of shares of Uber common stock, as part of its previously announced share repurchase authorization.
Carvana Co. said it has reestablished an agreement with Ally Financial Inc. to sell the lender up to $4 billion in used-vehicle loan receivables over the next year, a move that counters one claim by short seller Hindenburg Research that the financier was pulling back on their relationship.
Walt Disney Co. and streaming provider FuboTV Inc. agreed to combine their online live TV businesses, creating the second-biggest digital pay-TV provider.
Paychex Inc. is in advanced talks to acquire Paycor HCM Inc., a smaller rival in payroll processing, according to people with knowledge of the matter.
Hon Hai Precision Industry Co. reported faster-than-expected 15% revenue growth after the server assembly partner to Nvidia rode sustained demand for AI infrastructure.

Key events this week:

Eurozone CPI, unemployment, Tuesday
US job openings, trade, ISM services, Tuesday
Fed’s Thomas Barkin speaks, Tuesday
Eurozone PPI, consumer confidence, Wednesday
US ADP employment, Fed minutes, consumer credit, Wednesday
Fed’s Christopher Waller speaks, Wednesday
China CPI, PPI, Thursday
Eurozone retail sales, Thursday
US state funeral and national day of mourning for former President Jimmy Carter is a federal holiday, Thursday
Fed’s Patrick Harker, Thomas Barkin, Jeff Schmid and Michelle Bowman speak, Thursday
Japan household spending, leading index, Friday
US jobs report, consumer sentiment, Friday

Some of the main moves in markets:

Stocks

Hang Seng futures fell 0.4% as of 8:10 a.m. Tokyo time
Australia’s S&P/ASX 200 rose 0.3%
Nikkei 225 futures rose 0.8%

Currencies

The euro was little changed at $1.0391
The Japanese yen was little changed at 157.75 per dollar
The offshore yuan was little changed at 7.3471 per dollar

Cryptocurrencies

Bitcoin rose 0.4% to $102,040
Ether was little changed at $3,671.64

Bonds

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Richard Henderson.