Most Asian currencies were largely unchanged on Monday amid a broader risk-off mood sparked by fresh U.S. tariff threats against Europe, while investors also digested slightly stronger-than-expected economic growth data from China.
The US Dollar Index fell 0.2% from a seven-week high in Asian hours. US Dollar Index Futures traded 0.3% lower as of 03:58 GMT.
Get exclusive Asia FX insights and analyst commentary with InvestingPro Yuan hits 32-mth high after China Q4 GDP China provided a partial offset to the risk-averse tone after data showed the world’s second-largest economy grew slightly more than expected in the fourth quarter.
Gross domestic product growth allowed China to meet its official 5% growth target for 2025, offering some reassurance on the region’s economic momentum despite lingering concerns over weak domestic demand and property sector strains.
The Chinese yuan’s onshore pair USD/CNY edged down 0.1% to its lowest level since May 2023.
Asia FX steady after Trump Greenland tariff threats Risk sentiment deteriorated after U.S. President Donald Trump said he would impose tariffs on eight European nations that have opposed his plan to acquire Greenland.
Trump said a 10% levy would take effect from Feb. 1 and rise to 25% in June if no agreement is reached, reviving fears of an escalation in transatlantic trade tensions and potential spillovers into global markets.
Media reports suggested the European Union is preparing to halt progress on an EU-U.S. trade deal and could revive a previously outlined 93 billion euro tariff package targeting U.S. goods.
France has also pushed for the bloc to deploy its anti-coercion instrument against Washington, a powerful tool designed to respond to economic pressure from third countries.
In Asian foreign exchange markets, most regional currencies traded in tight ranges as traders refrained from taking aggressive positions.
The South Korean won’s USD/KRW pair inched up 0.1%, while the Singapore dollar’s USD/SGD fell 0.2%.
The Indian rupee’s USD/INR traded largely unchanged.
The Australian dollar’s AUD/USD pair gained 0.1% on Monday.
Japanese snap elections in focus The Japanese yen rose against the dollar, with the USD/JPY pair ticking down 0.2% to a 10-day low, benefiting from safe-haven demand amid global trade uncertainty.
Political developments in Japan also remained in focus, amid reports that Prime Minister Sanae Takaichi is considering calling a snap election in the coming weeks to strengthen her mandate.
"For now, the Japanese Yen faces headwinds from election uncertainty and so we could only get better clarity post February before a clearer trend emerges," MUFG analysts said in a note.
"Our global team still thinks that over medium term JPY has already been quite weak so far, and our bias is still to see USD/JPY move lower over time, depending on how elections pan out of course," they added.
