Indonesia Secures Tariff Relief for Key Exports Amid Strategic Trade Concessions to U.S.

Economic

Summary:

Indonesia has reached a preliminary agreement with the United States for a tariff exemption on palm oil, cocoa, and rubber exports, effectively reversing President Trump’s 19% tariff introduced earlier this month..

Washington Grants Relief on Non-Competing Commodities

Indonesia’s top economic policymaker, Airlangga Hartarto, announced that the U.S. has "agreed in principle" to lift the 19% tariff on Indonesian palm oil, cocoa, and rubber products not produced domestically in the United States. Though the exact implementation date is pending final negotiations, the exemption marks a key trade breakthrough under Trump’s aggressive tariff policy that had jolted Southeast Asian exporters since August 7.

The preliminary agreement underscores the pragmatic nature of recent U.S. trade recalibrations: prioritizing exemptions on goods that do not threaten domestic producers, while leveraging strategic negotiations to gain access to foreign markets and secure reciprocal investments.

Indonesia’s Bargain: Billions in Trade and Investment Concessions

In exchange for tariff relief, Indonesia made significant overtures to the United States. Jakarta pledged to invest billions of dollars into U.S. energy and commodity markets, including large purchases of American crude oil, liquefied petroleum gas (LPG), airplanes, and agricultural products. Furthermore, Indonesia committed to a sweeping tariff reduction scheme that would allow almost all U.S. goods to enter its market duty-free.

These pledges are not purely symbolic. They reflect Jakarta’s ambition to secure preferential trade access while attracting U.S. investment into domestic infrastructure and energy sectors. Notably, talks included the possibility of U.S. investment in Indonesia’s fuel storage system via a partnership between U.S. firms, the Indonesian sovereign wealth fund Danantara, and state-owned oil company Pertamina.

Race to the Front: Indonesia Moves Swiftly Amidst Regional Tariff Pressure

Indonesia was one of the first countries to strike a deal with the U.S. in July, ahead of the formal tariff rollout. However, it still found itself hit with the same 19% rate imposed on regional peers like Thailand and Malaysia, and just below Vietnam’s 20%. Tuesday’s exemption marks a significant correction and an early win in the regional contest to negotiate better U.S. trade terms.

With global supply chains still recalibrating from pandemic disruptions and geopolitical shifts, Indonesia’s swift trade diplomacy offers a template for navigating Washington’s transactional trade agenda under Trump. By aligning its strategic sectors and trade preferences with U.S. policy priorities, Jakarta has gained breathing room for its vital export industries.

Strategic Commodities Drive Bilateral Realignment

The prospective removal of tariffs on palm oil, cocoa, and rubber critical commodities for Indonesia’s export earnings and rural employment comes at a politically sensitive time. For President Trump, who is juggling numerous bilateral trade renegotiations, the deal reflects a targeted approach to reduce supply chain friction without compromising domestic industries.

For Indonesia, the exemption signals both an economic reprieve and a political victory, as it demonstrates Jakarta’s growing agility in navigating great power politics while protecting its export competitiveness. If finalized, this agreement could serve as a model for other developing economies seeking tariff relief amid a shifting global trade landscape.

Source: Reuters

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Michelle

Economic

Forex

Global investors were shell-shocked on Tuesday after U.S. President Donald Trump struck another blow at the Federal Reserve's independence, caught between the concerns over politicisation of policy and the payoffs for markets.

Trump's announcement he was firing Fed Governor Lisa Cook surprised markets, even though he had made clear last week that Cook was a target and has for months attacked Chair Jerome Powell as part of his campaign to get the Fed to cut rates.

"It's another crack in the edifice of the United States and its investibility," said Kyle Rodda, a senior financial market analyst at Capital.com in Melbourne.

Rodda said he was concerned about the motives of the Trump administration, that the move was not to preserve Fed integrity but rather to install Trump's own people at the central bank.

"It goes back to trust in institutions," he said.

While Cook's departure is not assured and she has disputed Trump's authority to remove her, that Trump said her firing was "effective immediately" just two weeks before the Fed's policy meeting, is another matter of concern for investors.

Still, market reaction was tame. Short-term Treasury yields fell slightly, while expectations such forced easing of monetary conditions will lead to inflation pushed the yield on the 30-year bond up 4.7 bps to 4.936%.

U.S. S&P 500 stock futures dipped just 0.07% while the dollar's index versus a basket of currencies retreated 0.1%.

"People want to see if it happens, but at the same time, it's very difficult to sell the U.S. because of the credibility issues," said Tohru Sasaki, chief strategist at Tokyo-based Fukuoka Financial Group.

One factor investors have to consider is Trump's trade deals, which require countries across Europe and Japan and South Korea to invest hundreds of billions in the United States, Sasaki said.

"If there is a lot of investment into the United States, eventually the dollar will be supported, U.S. equities will be supported. So you may just lose money making a short position in the dollar or U.S. assets."

EXCEPTIONALISM

Trump's gradual ratcheting up of his campaign to exert more influence over the path of monetary policy has already knocked confidence in U.S. sovereign debt as a safe investment, and in the exceptional advantage the dollar enjoyed as a currency of choice.

That advantage had allowed the U.S. to fund a massive national debt that currently stands at $36 trillion, and owe international investors some $26 trillion at the end of 2024.

Source: Yahoo Finance

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Gerik

Economic

Rising U.S. Yields Spill Over to Japan

The political rift between U.S. President Donald Trump and the Federal Reserve has rippled across global bond markets, with Japanese government bond (JGB) yields climbing sharply in response to soaring U.S. Treasury yields. Following Trump’s announcement to remove Fed Governor Lisa Cook an action whose legality remains disputed investors braced for the prospect of a more politically influenced, dovish Federal Reserve. That speculation led to a steepening of the U.S. yield curve, where long-end yields jumped while short-end rates declined.

Japan’s 30-year JGB yield mirrored the upward trend, hitting its previous all-time high of 3.215%. For Tokyo, this development is more than a passing concern. Japan's public debt now exceeds 250% of GDP, making it exceptionally sensitive to shifts in global interest rates. As Finance Minister Katsunobu Kato warned, the Ministry of Finance is now forced to closely monitor JGB volatility and adjust debt issuance strategy accordingly.

Fed Independence in Question: A Catalyst for Volatility

The spike in yields stems not just from expectations of future inflation, but also from the erosion of investor confidence in the Fed’s independence. Although Lisa Cook has legally contested Trump’s ability to remove her, the attempt alone sends a troubling signal to global markets that the Fed could become more susceptible to political pressure. As Mizuho Securities’ strategist Shoki Omori emphasized, “The Fed doesn't look like an independent organisation anymore.”

Such concerns have major implications for long-end Treasuries. If markets increasingly price in looser U.S. monetary policy and higher inflation, demand for long-duration bonds could wane, triggering a global repricing of sovereign debt starting with the most interconnected economies like Japan.

Japan’s Fiscal Tightrope: No Margin for Error

Japan’s fiscal position complicates the situation further. The Ministry of Finance is preparing to request a record ¥32 trillion (approximately $217 billion) for debt servicing next year. Rising yields threaten to inflate these obligations even more, especially if market participants demand higher risk premiums for holding Japanese long-term debt.

Additionally, political instability in Tokyo is adding to the uncertainty. Prime Minister Shigeru Ishiba’s refusal to resign after his party’s upper house defeat has raised fears of policy gridlock. Any delays in budget negotiations or fiscal discipline could worsen bond market sentiment and accelerate the sell-off in JGBs.

Global Contagion Risk: JGBs Move in Lockstep with Treasuries

With Japan holding over $2 trillion in U.S. assets, the convergence between Treasury and JGB yields is almost automatic. Japanese investors have long pursued higher returns abroad through yen-funded carry trades, and U.S. yields have become an irresistible pull factor. But as long-end Treasury yields rise on inflation fears, JGBs are being dragged along a dynamic that now poses risks to both domestic and global financial stability.

Harry Ishikawa, a former Japanese regulator, noted bluntly that “the Ministry of Finance will try to cap it. They will tweak issuance or whatever to do that,” but options are narrowing as buyers become increasingly scarce.

The episode highlights how deeply intertwined global bond markets are with U.S. political developments. Trump’s challenge to Fed independence has set off a chain reaction from inflation fears in the U.S. to fiscal panic in Japan. Without a credible reaffirmation of the Fed’s autonomy and clearer fiscal direction from Tokyo, the risk of sustained upward pressure on long-term yields both in the U.S. and Japan remains high, potentially destabilizing global capital flows and debt sustainability projections.

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FXOpen

Economic

Forex

Technical Analysis

Powell’s speech on Friday had a distinctly dovish tone. Expectations of an interest rate cut strengthened, which led to a sharp weakening of the dollar — on the EUR/USD chart, a bullish impulse A→B was formed.On Monday, as often happens after an initial emotional reaction to major news, the price corrected as market participants reassessed prospects in light of the Fed Chair’s softened rhetoric.

What is particularly notable is that the correction was most evident on the EUR/USD chart, where the decline B→C almost completely offset Friday’s surge. This could point to underlying weakness in the euro, which seems justified when considering that the euro index EXY (the euro’s performance against a basket of currencies) has risen by roughly 13% since the beginning of the year.

The EUR/USD rate reacted less strongly to the news that President Trump had decided to dismiss Lisa Cook, a member of the Federal Reserve’s Board of Governors. While the media debates whether the President has the authority to remove her, traders may instead assess how EUR/USD could fluctuate following the A→B→C volatility swing.

Technical Analysis of the EUR/USD Chart

Recently, we outlined a descending channel using the sequence of lower highs and lows observed this summer. The upper boundary clearly acted as resistance for EUR/USD’s rise on Friday.

From the bears’ perspective:

→ the price has broken downward through an ascending trajectory (shown in purple), and the lower purple line has already changed its role from support to resistance (as indicated by the arrow);

→ today’s rebound from the 1.1600 support level appears weak, as highlighted by the long upper shadow on the candlestick;

→ if this rebound is merely an interim recovery following the bearish B→C impulse, it fails to reach the 50% Fibonacci retracement level.

In addition, the B peak only slightly exceeded the previous August high (which resembles a bull trap).

Taking all this into account, we could assume that in the near term we may see bears attempt to break the 1.1600 support level and push EUR/USD towards the median line of the primary descending channel.

Source: FXOpen

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Gerik

Economic

Strategic Alliance Faces a Defining Moment

According to the Center for Strategic & International Studies (CSIS), the AUKUS partnership between the United States, United Kingdom, and Australia has reached a pivotal juncture. Launched in 2021 as a response to growing tensions in the Indo-Pacific, particularly with China’s rising assertiveness, AUKUS was hailed as a landmark defense pact. At its core, the agreement promises Australia a new fleet of eight nuclear-powered submarines, bolstered by U.S. and U.K. technology and support.

But a recent Pentagon review, paired with delays and strategic ambiguity from Australia, has prompted questions about the agreement’s viability. CSIS analysts Abraham Denmark and Charles Edel, both former U.S. national security officials, argue that the success of AUKUS is now a “strategic imperative” for maintaining regional stability and deterring Chinese aggression.

Timeline Gaps and Operational Uncertainty

The partnership’s submarine timeline illustrates the complexity of execution: Australia is scheduled to begin receiving Virginia-class submarines from the U.S. in the early 2030s, followed by the joint development of the SSN-AUKUS class with the UK, with deliveries not expected until the 2040s. These extended timeframes raise concerns about AUKUS’s ability to respond to shorter-term regional threats, including those surrounding the Taiwan Strait.

Complicating matters further is Australia’s commitment or lack thereof to the operational use of these submarines. While the U.S. seeks strategic clarity, Canberra has maintained a stance of “strategic ambiguity,” declining to specify how or if the U.S.-supplied submarines would be used in potential flashpoints such as a conflict over Taiwan. CSIS analysts recommend that the U.S. and Australia begin a formal contingency planning process, allowing for better coordinated responses and greater mutual trust.

A Test of Allied Resolve Amid Chinese Competition

For Washington, the stakes are high. A failure of AUKUS would not only undermine trust among Western allies but also erode the U.S. industrial base and its influence in the Indo-Pacific. CSIS emphasizes that success would go beyond deterrence it would strengthen U.S. defense manufacturing, build deeper interoperability among allies, and project a unified front in the face of Chinese military and political expansion.

From the UK’s perspective, AUKUS offers a long-term path to maintaining relevance in Indo-Pacific affairs and reinforcing the transatlantic alliance’s global scope. For Australia, it is a once-in-a-generation investment in defense capability but one that must be matched with operational clarity and regional commitment.

The CSIS report functions as a call to action for AUKUS members. With geopolitical tensions intensifying, particularly around Taiwan and the South China Sea, hesitation or disunity could render the alliance ineffective at a critical moment. As the timeline for submarine delivery stretches into the next two decades, the success of AUKUS will depend not just on technological cooperation, but on coordinated military planning, political will, and a shared understanding of the strategic threats that lie ahead.

Source: Reuters

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Golden Gleam

Commodity

Technical Analysis

The recent price actions of Gold (XAU/USD) have started to trade firmer since last Friday, 22 August, with a gain of 1%, on increased hopes that the US Federal Reserve is likely to enact its first interest rate cut of 2025 in the next month’s FOMC meeting.

Fed Chair Powell’s Jackson Hole Symposium dovish speech has led traders in the Fed Funds futures market to firm up bets that the Fed is likely to cut twice in 2025 (25 basis points each), with a probability of 81% that the Fed Funds rate will be at 3.75%-4.00% on 10 December 2025 FOMC meeting at the time of writing from the current range of 4.25%-4.50%.

Lower interest rates reduce the opportunity cost of holding gold, an asset that yields no interest, thereby boosting its appeal and increasing demand, which in turn puts upward pressure on prices.

Safe haven bids extend gains for Gold over fears of Fed’s independence

In today’s early Asia session, Gold (XAU/USD) shot up by 0.6% to print a current intraday high of US$3,387, a two-week high before paring gains to 0.3% intraday at the time of writing due to safe haven demand as the independence of the US Federal Reserve gets eroded over the firing of Federal Reserve Governor Lisa Cook by US President Trump.

Let’s decipher the latest technical developments on Gold (XAU/USD)

Fig. 1: Gold (XAU/USD) minor trend as of 26 Aug 2025 (Source: TradingView)

Fig. 2: Gold (XAU/USD) medium-term trend as of 26 Aug 2025 (Source: TradingView)

Preferred trend bias (1-3 days)

Bullish bias within a medium-term sideways range configuration with key short-term pivotal support at US$3,352/347, with next intermediate resistances coming in at US$3,402 and US$3,432/3,435 (see Fig. 1).

Key elements

Since the current all-time high of US$3,500 printed on 22 April 2025, the price actions of Gold (XAU/USD) have evolved into a medium-term sideways range configuration (see Fig. 2).
The current prices of Gold (XAU/USD) have traded back above the 20-day and 50-day moving averages since last Friday, August 22, and oscillated within a minor ascending channel in place since the 31 July 2025 low of US$3,268.
The hourly RSI momentum indicator has displayed a “higher low” right above the 50 level and has not reached its overbought region (above the 70 level). These observations suggest a potential short-term bullish momentum condition for Gold (XAU/USD).

Alternative trend bias (1 to 3 days)

A break below US$3,347 on Gold (XAU/USD) invalidates the bullish bias for another round of choppy decline towards the lower limit of the medium-term sideways range configuration, exposing the next intermediate supports at US$3,324 and US$3,310 in the first step.

Source: ACTIONFOREX

Risk Warnings and Disclaimers

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Gerik

Economic

Humain's Data Center Plans Signal Saudi Push Into AI Leadership

Saudi Arabia’s flagship artificial intelligence venture, Humain, has officially started construction on its first major data center sites, aiming to begin operations by early 2026. With facilities located in Riyadh and Dammam, each data center is projected to handle up to 100 megawatts of capacity. These facilities mark the first phase of a broader strategy to deliver 1.9 gigawatts of AI infrastructure across the kingdom by 2030.

According to CEO Tareq Amin, the company has already secured local regulatory approval to purchase 18,000 of Nvidia’s latest high-performance AI chips. Procurement processes with Nvidia and other U.S. chipmakers are underway, pending formal export approvals from the U.S. government. Amin emphasized that these steps are mostly procedural, hinting at an open political channel for semiconductor transfers following a visit by U.S. President Donald Trump in May.

Partnerships Cement Strategic Alliances with US Tech Giants

Humain is rapidly emerging as the centerpiece of Saudi Arabia’s ambitions to dominate the AI landscape in the Middle East. The company is not only importing Nvidia chips but also forging strategic partnerships with a host of American firms including Qualcomm, Cisco Systems, and Advanced Micro Devices (AMD).

One of the most notable collaborations is a $10 billion joint venture with AMD, which will involve the creation of a special purpose investment fund in Saudi Arabia where AMD is expected to hold equity. This partnership goes beyond just hardware it also encompasses AI infrastructure development on a national scale.

The company is already operational in certain aspects. For instance, it has partnered with California-based Groq Inc. to develop and power its Arabic-language AI assistant, Humain Chat, which will soon expand across the Middle East after an initial rollout in the kingdom.

A National Fund Powers Rapid Deployment of AI Infrastructure

Launched in tandem with Trump’s visit, Humain Ventures a $10 billion investment fund tied to the AI firm has begun deploying capital to support these initiatives. While CEO Amin did not disclose the exact breakdown of current investments, the fund’s scope covers AI hardware, software, infrastructure, and strategic global partnerships.

These developments position Saudi Arabia as a key player in the global AI race, strategically leveraging its sovereign wealth fund to bridge geopolitical divides and secure access to cutting-edge Western technology. Amin’s comments also confirmed ongoing discussions with Elon Musk’s xAI about a future data center deal in the kingdom, hinting at even broader ambitions.

Humain’s data center initiative is not just a domestic infrastructure project it is a reflection of Saudi Arabia’s strategic alignment with the U.S. in the realm of emerging technologies. In a time when semiconductor supply chains and AI capabilities are increasingly viewed as geopolitical tools, the kingdom’s ability to work with U.S. firms like Nvidia, AMD, and Groq underlines its growing influence. As Humain scales up operations and prepares for regional expansion, the Middle East may soon witness a new AI powerhouse rising from the desert with chips, funding, and approval from Washington.