Asian currencies held largely steady on Tuesday as investors awaited a key U.S. inflation report for clues on the Federal Reserve’s rate outlook, while attention turned to a slew of Chinese economic data, including a stronger-than-expected GDP print.
With just two weeks remaining to finalize trade agreements with the U.S., market participants remained cautious amid President Donald Trump’s escalating tariff threats ahead of the August 1 deadline.
The US Dollar Index, which measures the greenback against a basket of major currencies, edged 0.1% lower in Asia hours, but remained near three-week highs.
US Dollar Index Futures traded largely unchanged.
China Q2 GDP beats forecasts; June industrial print solid Data on Tuesday showed that China’s economy expanded 5.2% year-on-year in the second quarter of 2025, slightly above market expectations of 5.1%, supported by resilient exports and government stimulus.
The strong print reflected limited impact from the U.S. trade war, as steep tariffs were in place for only a month before a mid-May de-escalation.
Separate data released on Tuesday showed that the country’s industrial production ramped up more than expected in June amid improving export demand.
However, retail sales rose less than forecast in June, while the unemployment rate remained steady at 5%.
The Chinese yuan showed little reaction to the data barrage. Both the onshore USD/CNY and offshore USD/CNH yuan pairs gained 0.1% on Tuesday.
Investors cautious ahead of US CPI
3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads. U.S. consumer price index inflation data for June is due on Tuesday and is expected to provide more insight into the economic effects of Trump’s tariffs.
Fed Chair Jerome Powell has said he expects tariffs to push inflation higher this summer, likely keeping the central bank on pause until later in the year.
Meanwhile, Trump continued with new tariff threats ahead of his Aug. 1 deadline. His recent action was against the European Union and Mexico.
A day earlier, Trump also threatened to impose secondary tariffs of 100% on Russia if President Vladimir Putin didn’t make a deal within 50 days to end the war in Ukraine.
Even though recent tariff threats have not had a large impact on broader market moves, traders refrained from placing large bets amid uncertainty.
The Japanese yen’s USD/JPY pair and the South Korean won’s USD/KRW were both muted.
The Australian dollar’s AUD/USD ticked 0.1% lower.
Indian rupee’s USD/INR pair fell 0.1%, while Indonesia’s USD/IDR gained 0.5%.
The Singapore dollar’s USD/SGD pair traded largely flat.
