SINGAPORE (Reuters) – The dollar found some stability on Monday as Asian stocks made minor movements. Traders are reflecting on the potential direction of U.S. monetary policy in light of last week’s interest rate cuts by the Federal Reserve. The recent crackdown on worker visas by the Trump administration has stirred mixed emotions among immigrants.
Attention is turning toward Indian and technology stocks, following the announcement that businesses may need to pay $100,000 annually for new H-1B worker visas.
U.S. stock futures dipped slightly during early trading, with S&P futures down 0.1%. Meanwhile, MSCI’s broad index of Asia-Pacific stocks outside of Japan saw a slight increase of 0.09%. The Nikkei in Tokyo rose 1% after a decline on Friday.
India’s information technology sector, valued at $283 billion and heavily reliant on U.S. revenues, faces short-term challenges due to rising tensions between India and the U.S.
Last month, tariffs on imports from India were doubled to 50%, attributed to India’s purchase of Russian oil.
“There’s a real concern about operating costs and margins. Of course, wages and labor expenses could rise a bit,” noted one source.
Additionally, tech companies in the U.S. are struggling to find enough workers, which may push them to consider offshore labor—even if that leads to potential repercussions.
On the macroeconomic front, investors remain focused on the trajectory of U.S. monetary policy after the recent rate cuts, with indications of a gradual easing ahead.
While several policymakers are expected to provide updates this week, the Fed’s inflation data, set to release on Friday, will likely influence future rate forecasts.
IG market analyst Tony Sycamore predicts that the core PCE price index may rise by 0.2% monthly, hitting 2.9%, which is above April’s lower figure of 2.6%. Traders are anticipating 44 basis points by year’s end.
This has kept the dollar on a positive path for now; the Dollar Index, reflecting U.S. currency against six others, stood at 97.716.
The outlook for the dollar remains uncertain. It’s crucial to consider that discussions around greenback trading have become increasingly complex, especially following last week’s favorable movements.
In the context of upcoming Treasury supply and scheduled Fed discussions, fluctuations in Treasury yields could significantly impact the dollar’s flow.
The Japanese yen saw a slight decline to 148.20 per U.S. dollar after two board members questioned the need to stabilize interest rates, following a stronger position from the bank on Friday.
Japan’s central bank has kept its short-term interest rate at 0.5%, though discussions about an increase to 0.75% are beginning to surface, potentially signaling future tightening of borrowing costs.
Vasu Menon, managing director of OCBC Bank’s investment strategy, believes Friday’s moves hint at a gradual shift toward a hawkish stance from Japan’s central bank.
Hope for further rate increases, along with higher JGB yields, could lead to a stronger yen—but may not bode well for Japanese stocks and bonds in the near term.
In the commodities market, crude oil prices climbed during early trading, with Brent crude futures ticking up by 0.3% to $66.89 per barrel. U.S. West Texas Intermediate futures rose 0.35% to $62.9.
Gold prices increased by 0.24% to $3,692.79 per ounce, just shy of last week’s record high.
