Investing.com-- Most Asian currencies edged higher on Tuesday after the U.S. and China agreed to temporarily bring down respective trade tariffs, while globally investors awaited key U.S. inflation data due later in the day.
The US Dollar Index, which measures the greenback against a basket of major currencies, edged 0.2% lower in Asian trade on Tuesday, after sharp gains in the previous session.
Japanese yen, Chinese yuan gain on US-Sino trade deal optimism
The U.S. and China said on Monday they have agreed to temporarily lower soaring tariffs placed on each other.
The U.S. will reduce its tariff on Beijing from 145% to 30%, while China will lower its retaliatory tariff from 125% to 10%, both for 90 days.
The announcement came via a joint statement following trade talks in Switzerland over the weekend.
“This was a larger-than-expected de-escalation and represents an upgrade to the outlook, though the negotiation process will likely remain challenging,” ING analysts said in a note.
These developments sent the U.S. dollar jumping on Monday, but it fell in Asia hours on Tuesday, alleviating some pressure on regional currencies.
The Japanese yen’s USD/JPY pair fell 0.4%.
Both Chinese yuan’s offshore USD/CNH and onshore USD/CNY pairs fell 0.2% on Tuesday.
The Singapore dollar’s USD/SGD pair ticked down 0.2%, while the Philippine peso’s USD/PHP declined 0.4%.
The Australian dollar’s AUD/USD pair edged up 0.2%. Westpac survey showed on Tuesday that Australian consumer sentiment rebounded slightly in May due to an improvement in financial markets and easing fuel prices.
Bucking the trend, the South Korean won’s USD/KRW pair rose 0.3%.
US CPI awaited; India-Pakistan tensions on watch
Globally, investors awaited the U.S. consumer price index inflation data for April, due on Tuesday, to assess the impact of President Donald Trump’s trade policies.
Elsewhere, the Indian rupee’s USD/INR pair edged 0.2% lower, after a sharp decline in the previous session on India-Pakistan ceasefire.
Indian PM Narendra Modi on Monday warned Pakistan that India would strike cross-border “terrorist hideouts” again if attacked, dismissing Islamabad’s “nuclear blackmail.”
Both sides agreed to a ceasefire over the weekend, announced by U.S. President Trump, following the worst fighting in decades.