On Monday, March 24, 2025, the White House announced a reduction in the upcoming April 2 tariff plans, focusing on targeted reciprocal levies. Sector-specific tariffs on automobiles, semiconductors, and pharmaceuticals are unlikely to be announced, although tariffs will affect major trading partners known as the ‘Dirty 15’.
The USD weakened following the news, with US equity index futures rising. As a result, currencies such as AUD, EUR, GBP, NZD, and CAD strengthened. USD/JPY approached 150 but did not reach that level, while comments from Japanese officials contributed to a stable, weaker yen.
Asia Economic Indicators
Preliminary PMIs for March from Australia and Japan indicated a decline compared to February. The People’s Bank of China set the USD/CNY reference rate at its weakest level since January 20. Additionally, South Korea’s Constitutional Court overturned Prime Minister Han Duck-soo’s impeachment in a 7-1 decision.
The tariff adjustments indicate a deliberate shift in trade policy that favours targeted measures over broad-based duties. Automotive, semiconductor, and pharmaceutical sectors remain untouched, reducing the immediate risk of supply chain disruptions in those industries. The revised approach suggests a preference for tariffs aimed at specific countries rather than entire sectors, which keeps pressure on designated trading partners while easing concerns for global manufacturers.
Following the White House announcement, the dollar lost ground, prompting gains in other major currencies. The move higher in US equity index futures suggests that markets interpret the lowered tariff risk as a positive for business sentiment and corporate earnings. With that in mind, the Australian dollar, euro, pound, and Canadian dollar benefited from dollar weakness, while the yen traded lower as Japanese policymakers aimed to curb excessive strength. Although the USD/JPY pair neared 150, it failed to breach that key level, preventing an immediate response from Japan’s Ministry of Finance.
March’s early purchasing managers’ indices for Australia and Japan painted a less optimistic picture, showing contraction compared to February. A weaker growth outlook in both economies may reinforce expectations for accommodative central bank policies ahead. Meanwhile, China’s central bank allowed its currency reference rate to weaken to levels last seen in January, possibly reflecting an intent to maintain export competitiveness.
South Korea Political Stability
Outside currency markets, political developments in Seoul added another layer of complexity to regional sentiment. The South Korean Constitutional Court ruled 7-1 in favour of overturning Prime Minister Han Duck-soo’s impeachment, removing a source of political uncertainty. While domestic policy implications remain, the ruling minimises near-term shifts in executive leadership, helping to stabilise investor outlook in the country.
For those navigating derivative positions, paying close attention to near-term price movements will be imperative. With the White House’s softened stance on tariffs and a weaker dollar to start the week, currency pairs tied to the greenback could see further adjustment. The yen’s stability, despite approaching a psychologically important level, suggests intervention risk is not heightened yet, but policymakers’ rhetoric should be monitored closely. Meanwhile, economic softness in Australia and Japan suggests potential downside risks for both currencies unless external factors provide upward support.
