SYDNEY, June 30 — Asian shares firmed on Monday as signs of progress in a trade standoff between the US and Canada helped risk sentiment, while the dollar dipped on concerns US jobs data will show enough weakness to justify larger rate cuts.

Canada on Sunday said it had rescinded its digital services tax in a bid to advance trade negotiations, bowing to pressure from President Donald Trump.

The talks aim to finalise a deal by July 21, extending Trump’s original July 9 deadline for his “reciprocal” tariffs. Officials have suggested most deals could be done by the September 1 Labor Day holiday.

Investors are also keeping a wary eye on the progress of a massive US tax-cutting and spending bill slowly making its way through the Senate, with signs it may not meet Trump’s preferred July 4 deadline.

The Congressional Budget Office estimated the bill would add US$3.3 trillion (RM13.9 trillion) to the country’s debt, testing foreign appetite for US Treasuries.

There was no doubting the demand for the US tech sector and megacap growth stocks including Nvidia, Alphabet and Amazon. Nasdaq futures rose another 0.4 per cent, while S&P 500 e-minis added 0.3 per cent.

Eurostoxx 50 futures rose 0.2 per cent, while FTSE futures were flat and DAX futures gained 0.3 per cent.

The bullish sentiment spilled over into Japan’s Nikkei, which rose 1.6 per cent, while South Korean stocks gained 0.8 per cent. MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.2 per cent.

Chinese blue chips edged up 0.2 per cent, as surveys showed manufacturing improved slightly in June while service activity picked up.

A holiday on Friday means US payrolls are a day early, with analysts forecasting a rise of 110,000 in June and the jobless rate ticking up to the highest in almost a year at 4.3 per cent.

The resilience of the labour market is a major reason the majority of Federal Reserve members say they can afford to wait on cutting rates until they can gauge the true impact of tariffs on inflation, so a weak report would stoke speculation of a rate cut in July rather than September.

“While initial jobless claims retreated somewhat from their recent high, continuing claims jumped higher yet again,” noted Michael Feroli, head of US economics at JPMorgan. “Consumers’ assessment of labour market conditions also deteriorated in the latest confidence report.”

“Both of these developments suggest that the unemployment rate in June should tick up to 4.3 per cent, with a significant risk of reaching 4.4 per cent.”

The latter outcome would likely see futures push up the chance of a July easing from the current 18 per cent and price in more than the present 63 basis points of cuts for this year.

Dollar coldrums

Fed Chair Jerome Powell will have an opportunity to repeat his cautious outlook when he joins several other central bank chiefs at the European Central Bank forum in Sintra on Tuesday.

The prospect of an eventual policy easing has helped Treasuries weather worries about the US budget deficit and the huge amount of borrowing it entails.

Yields on 10-year Treasuries were steady at 3.28 per cent, having fallen 9 basis points last week.

The dollar has not fared as well, partly due to concerns that tariffs and chaotic policies from the White House will drag on economic growth and erode the country’s claim to exceptionalism.

The euro hovered near its highest since September 2021 at US$1.1727, having climbed 1.7 per cent last week, while sterling stood near a similar peak at US$1.3722.

The dollar was down 0.3 per cent on the yen at 144.14, and slipped 0.1 per cent on the Canadian dollar to 1.3665 following the trade news. The dollar index eased to 97.146.

James Reilly, a senior markets economist at Capital Economics, noted the dollar had fallen more at this stage in the year than in any previous year since the US moved to a free-floating exchange rate in 1973.

“At this point, further weakness could become self-reinforcing as underhedged European/Asian portfolios chase the move,” he added.

“So, we suspect that this could be a pivotal period for the greenback — either it turns around here or there is another 5 per cent or so fall around the corner.”

Commodities

In commodity markets, the general revival in risk sentiment has undermined gold, which hovered at US$3,279 an ounce and further away from April’s record top of US$3,500.

Oil prices continued to struggle on concerns about plans for increased output from Opec+, which contributed to a 12 per cent slide last week.

Brent dropped a further 27 cents to US$67.50 a barrel, while US crude eased 43 cents to US$65.09 per barrel. — Reuters