Key Takeaways
- President Donald Trump has paused 50% tariffs on Canadian goods for three days, citing a tentative trade agreement reached late Tuesday night.
- RBA Deputy Governor Andrew Hauser warned of potential interest rate hikes if Australian inflation remains persistent or upside risks crystallize.
- Canada and the U.S. have reportedly reached a deal "subject to finalization," which may include the revival of the Keystone XL Pipeline.
- Indonesia's Jakarta Composite Index (JCI) reversed earlier losses to rise 0.3%, despite ongoing concerns regarding MSCI index removals.
- China's Ministry of Finance auctioned 1-month deposits at a 1.62% yield, as the country continues to manage domestic liquidity.
Trump Pauses 50% Canada Tariffs Following Last-Minute Deal
U.S. President Donald Trump announced via Truth Social late Tuesday that he is pausing the implementation of 50% tariffs on Canadian imports for a three-day period. The levies, which were set to take effect at 12:01 a.m. Wednesday, were halted after the President declared that the U.S. and Canada (EWC) have reached a deal, subject to the finalization of documents.
The agreement follows intense negotiations between President Trump and Canadian Prime Minister Mark Carney. While full details of the pact have not been released, Trump explicitly linked the breakthrough to the potential revival of the Keystone XL Pipeline, a project previously canceled by the Biden administration. The U.S. Trade Representative (USTR), Jamieson Greer, had earlier warned that the tariffs would affect nearly $20 billion in Canadian goods, including dairy, alcohol, and automotive products.
RBA Signals Hawkish Stance Amid Inflation Risks
In Australia, Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser delivered a hawkish message on Wednesday, stating that another interest rate hike remains possible. Speaking at an event in Queensland, Hauser emphasized that inflation is still "too high" and that the central bank is prepared to act if price pressures do not subside as expected.
Hauser noted that the Australian economy is facing a slowdown rather than a recession, but stressed that monetary policy must remain restrictive to curb demand. The RBA recently held its cash rate at 4.35%, but Hauser’s comments suggest that the "higher for longer" narrative remains firmly in place as the board monitors upside risks to the 2–3% inflation target range.
Asian Markets: Indonesia Rebounds, China Auctions Deposits
Asian markets showed mixed resilience on Wednesday. The Jakarta Composite Index (JCI) managed to reverse early losses, climbing 0.3% to reach approximately 6,450 points. The recovery comes despite a recent MSCI index review that saw the removal of several Indonesian constituents, including GoTo Gojek Tokopedia (GOTO), which has weighed on local sentiment.
Meanwhile, China's Ministry of Finance successfully auctioned one-month deposits with a yield of 1.62%. This move is part of Beijing's broader effort to manage banking system liquidity and stabilize the offshore yuan yield curve. Investors continue to eye Chinese government bonds, with the 10-year yield recently easing toward 1.67% amid ongoing domestic economic adjustments.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.