Most Asian currencies firmed slightly on Tuesday, advancing against a battered dollar as traders remained uncertain over the U.S. plans for more trade tariffs, as well as a potential deal with China. 

A market holiday in Japan made for softer trading volumes in the region. 

Most regional currencies were nursing steep losses in recent weeks, as a bitter tariff exchange between the U.S. and China and heightened uncertainty over the global economic outlook battered risk appetite. 

But some of these losses were softened by a sharp drop in the dollar, as traders also appeared to be slashing positions in U.S. assets. This trend was also apparent with a sharp fall in U.S. Treasuries, although they regained some ground this week. 

The Chinese yuan and the Taiwan dollar were among the better performers on Tuesday, while the Japanese yen weakened slightly as risk appetite improved. 

A Wall Street Journal report said U.S. President Donald Trump was considering some alterations to his steep automotive tariffs, in order to lessen their impact. 

Elsewhere, the Canadian dollar weakened, with the CAD/USD pair down 0.3% after the Liberal Party under Mark Carney was seen heading for a close victory in federal elections defined by Trump’s tariff and sovereignty threats. 

Dollar near 3-yr low as tariff uncertainty persists 

The dollar index and dollar index futures both moved little in Asian trade after coming back in sight of a three-year low this week.

The greenback was battered by what appeared to be a mass pivot away from U.S. assets, amid uncertainty over Trump’s trade and economic agenda. 

The WSJ reported on Monday evening that Trump was considering scaling back some of his automotive tariffs, amid heightened concerns over their economic impact. The move offered some relief to markets, and sparked bets that Trump will seek further deescalation in his tariff agenda.

U.S.-China trade talks are a major point of focus, although both sides have offered wildly different signals on negotiations. Trump claimed that his administration was in talks with China, while Beijing denied any such claims. 

Chinese yuan firms; Asian econ. data awaited 

Focus this week is squarely on a string of key Asian economic readings, as well as a Bank of Japan meeting.

The Chinese yuan firmed on Tuesday, with the USD/CNY pair falling 0.3%. Chinese purchasing managers index data for April is due on Wednesday, and is set to offer more cues on business activity in the face of a dire Sino-U.S. trade war. 

The Australian dollar’s AUD/USD pair fell 0.1%, with focus turning to first-quarter consumer inflation data due on Wednesday. The print is widely expected to factor into the Reserve Bank’s outlook on interest rate cuts, with analysts projecting a sustained decline in inflation will elicit more easing. 

The Japanese yen’s USD/JPY pair rose 0.3% as the currency gave up more of its recent gains. The BOJ is set to meet later this week, and is expected to keep rates unchanged amid heightened economic uncertainty. But the BOJ could still signal further monetary tightening, especially as Japanese inflation rose sharply in recent months. 

Among other Asian units, the Taiwan dollar’s TWD/USD pair fell 0.5%, while the South Korean won’s USD/KRW pair rose 0.1%.

The Singapore dollar’s USD/SGD pair fell 0.2%, while the Indian rupee’s USD/INR pair fell 0.2% to below 85 rupees.