Asia FX Rises on US-China Trade Truce, RBA Policy Focus

Asian currencies and markets have shown modest gains following the extension of a US-China tariff truce, which temporarily eases trade tensions and benefits export-driven economies in the region. President Donald Trump extended the truce by another 90 days, preventing the imposition of steep tariffs and allowing continued negotiations, although broader trade issues remain unresolved. The trade truce has reduced systemic risk and improved investor confidence, but markets remain cautious, awaiting further details and sustained progress before committing to larger positions. Despite the easing of trade tensions, the US Dollar remains strong due to its safe-haven status, supported by robust economic data and favorable interest rate differentials. Investors are now focusing on upcoming US inflation data, which could influence Federal Reserve interest rate decisions and impact global markets. Overall, while the tariff truce provides temporary relief, uncertainty persists about the long-term trade outlook and its impact on currencies and global economic growth.