Asian Currencies Steady Ahead of Fed, BOJ Meetings and U.S.–China Trade Talks

Asian currencies traded largely flat on Monday as investors awaited a busy week marked by key interest rate decisions from the U.S. Federal Reserve and the Bank of Japan, renewed U.S.–China trade negotiations, and a looming tariff deadline set by President Donald Trump.

The U.S. Dollar Index dipped 0.1% during Asian trading hours, with Dollar Index Futures showing little movement. The cautious mood persisted despite optimism from a newly announced U.S.–EU trade framework that reduces tariffs on European goods to 15% from the previously proposed 30%.

Attention is now on U.S.–China discussions in Stockholm, where both sides are expected to seek a three‑month extension of their tariff truce before it expires on August 12. Reports indicate neither country plans to escalate tensions or impose additional duties for now. However, market participants remain wary as the August 1 deadline approaches, which could trigger higher tariffs if no agreement is reached.

Currency movements across the region were subdued. Both onshore and offshore Chinese yuan pairs (USD/CNY and USD/CNH) were stable. The Singapore dollar (USD/SGD) and Indian rupee (USD/INR) also held steady, while the Australian dollar (AUD/USD) slipped 0.1%. The South Korean won recovered 0.3% after recent sharp losses, with USD/KRW retreating.

Investors are closely watching the Bank of Japan’s Thursday meeting, where rates are expected to remain unchanged amid trade uncertainty and political instability following last week’s upper house election defeat for the ruling coalition. Meanwhile, the U.S. Federal Reserve is also widely expected to hold rates steady on Wednesday, with markets awaiting signals on future policy moves.

Global markets are likely to stay cautious as these major central bank decisions and trade negotiations unfold this week.