Asian currencies waned on Thursday after a highly anticipated U.S.-China trade deal failed to reassure investors, while South Korean and Taiwan equities touched record highs on renewed investor enthusiasm for artificial intelligence.
The U.S.-China trade agreement , reached after a two-hour meeting between Presidents Donald Trump and Xi Jinping, failed to inspire a rush into risk assets as traders awaited further details.
While the deal includes tariff reductions and cooperation on fentanyl and rare earths, investors remain cautious, pricing in continued dialogue but staying highly sensitive to fresh headlines.
"The meeting represents a tactical pause or temporary de-escalation, rather than a structural breakthrough," said Mashika Loo, senior fixed income strategist at State Street Global Advisors in Tokyo.
"Markets remain skeptical of any grand bargain ... a shift in tone, particularly from Trump, could quickly reignite tariff threats and trigger risk-off sentiment."
Currencies in the region weakened against the dollar. The Philippine peso dropped the most with a 0.5% slide.
The Malaysian ringgit declined 0.3% while the Thai baht shed 0.4%.
Most Asian currencies were already under pressure since early Asian trading hours after the Federal Reserve Chair Jerome Powell's hawkish remarks dampened hopes for further easing this year.
Powell's comments helped prop up the U.S. dollar index , which hovered around two-week highs against a basket of major currencies.
"The U.S. dollar strengthened following a somewhat hawkish rate cut by the Federal Reserve, weighing on regional currencies," MUFG analysts wrote in a note.
"High-yielding currencies such as the Indonesian rupiah (IDR), Indian rupee (INR), and Philippine peso (PHP) could stay under pressure."
South Korea's KOSPI index finished a few pips higher at its best closing level after scaling a new all-time high of 4,146.72 points earlier in the day. Investors cheered AI-darling Nvidia’s landmark move past a $5 trillion valuation and strong quarterly earnings from Samsung Electronics.
Wednesday's trade deal between Trump and South Korean President Lee Jae Myung also bolstered shares in Seoul.
Taiwan's benchmark equity gauge gained 0.8% to a record high 28,527.68 points, before paring somewhat to trade flat as of 0651 GMT.
In Southeast Asia, shares in Manila fell 0.8%, while Singapore and Thailand stocks declined 0.4%. Japan's yen slipped 0.2% to 152.65 against the U.S. dollar, as the Bank of Japan stood pat on rates but repeated its pledge to continue increasing borrowing costs if the economy moved in line with its projections.
HIGHLIGHTS:
** Yield on Indonesia's 10-year bonds ticks higher to 6.024%
** Thailand investment applications up 94% y/y in 9 months this year
** Hong Kong central bank cuts interest rate, tracking Fed move
** Trump asks Pentagon to immediately resume testing US nuclear weapons - Reuters
