Asian Stocks Slip, Dollar Rises Ahead of Tariff Deadline and Global Central Bank Decisions

Asian stock markets eased on Friday as investors took profits after recent gains, with Japan’s market retreating slightly from record highs. The pullback comes ahead of a critical week packed with events, including a looming U.S. trade deadline, key central bank meetings, and major corporate earnings. Despite the dip, the regional index remains on track for a weekly gain of 1.3%, bolstered by optimism over U.S. trade negotiations with China and the EU, following a successful agreement with Japan.

The U.S. dollar climbed against major currencies after rebounding from a two-week low, supported by solid economic data. The Japanese yen, however, weakened amid rising political uncertainty, as media reports hinted that Prime Minister Shigeru Ishiba may step down. This political instability, coupled with investor caution ahead of central bank announcements, pushed Japanese government bond yields close to their highest levels since 2008.

Market participants are bracing for a pivotal week. In the U.S., President Trump’s August 1 tariff deadline looms alongside a Federal Reserve policy meeting, the closely watched jobs report, and earnings from tech giants like Apple, Amazon, Meta, and Microsoft. Meanwhile, Japan’s central bank will release its policy decision Thursday, coinciding with a critical Liberal Democratic Party meeting that may determine Ishiba’s future.

The European Central Bank, for its part, kept interest rates steady on Thursday, choosing to pause its easing cycle to evaluate the potential fallout from U.S. tariffs. The euro weakened slightly against the dollar, while the U.S. currency extended gains against the yen. President Trump, meanwhile, continued to pressure Fed Chair Jerome Powell for rate cuts, though he downplayed previous threats to fire him.

In commodities, gold prices dipped 0.3% to $3,356 per ounce, reflecting reduced safe-haven demand. Oil prices, however, rose modestly, with Brent crude futures up 0.5% to $69.53 a barrel and U.S. WTI crude gaining the same to settle at $66.36. Investors are cautiously navigating shifting political and economic signals as a potentially market-moving week approaches.

Source: Reuters