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Stocks take a breather after relief rally over ceasefire

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Investors eye trade deals ahead of tariff deadline

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Dollar slides after Trump attacks Powell again

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Oil inch higher to stabilize after a volatile month

By Ankur Banerjee

SINGAPORE, June 26 (Reuters) - Asian stocks stuttered on

Thursday, while oil prices stabilized and the euro was perched

at a 3-1-2/-year high as investors weighed geopolitical,

economic and fiscal uncertainties as they braced for U.S.

President Donald Trump's deadline on tariffs.

Markets have been soothed by a ceasefire between Israel and

Iran that appeared to be holding, reducing the risks of

disruptions to the global oil trade and underpinning sentiment.

MSCI's broadest index of Asia-Pacific shares outside Japan

was little changed in early trading, as the

rally in Wall Street took a breather overnight. Tokyo's

Nikkei rose 0.9% to a four-month high.

The U.S. dollar selling kicked up a notch after a media

report said Trump has toyed with the idea of selecting and

announcing Federal Reserve Chair Jerome Powell's replacement by

September or October in a bid to undermine his position.

That pushed the euro to its strongest level since

November 2021. It last fetched $1.6805. The Swiss franc

firmed to a decade-high while the Japanese yen

strengthened 0.35% to 144.70 per dollar.

Trump has repeatedly criticized Powell for not cutting

interest rates and has floated the idea of firing him or naming

a successor soon, denting investor confidence in U.S. assets and

undermining the central bank's independence.

"I think it's a given that Trump's pick to succeed Powell,

when it comes, will be one that sits at the highly dovish end of

the spectrum and will support Trump's agenda of lowering

interest rates," said Tony Sycamore, market analyst at IG.

"The issue with this is it will resurface questions from

earlier in the year around the Fed's independence, which, as we

saw, undermines confidence in the Fed and the USD."

The dollar index, which measures the U.S. currency

against six rivals, wallowed at its lowest level since March

2022. The index has slid 10% this year as investors, worried by

Trump's tariffs and their on U.S. growth, look for alternatives.

Financial markets remain on edge over Trump's chaotic trade

policies as the clock ticks down to his July 9 deadline for

trade deals.

Powell, who resumed two days of congressional testimony on

Wednesday, said Trump's tariff plans may well just cause a

one-time jump in prices, but the risk it could fuel more

persistent inflation is large enough for the central bank to be

careful in considering further rate cuts.

Fed officials still expect to cut interest rates this year,

but the timing is uncertain as officials wait on looming trade

deadlines and for more certainty about the scope of the tariffs

that will be imposed and the ways that rising import levies

influence prices and economic growth.

"No one knows exactly how tariffs will impact inflation,

which will keep central banks in conservative mode, particularly

the Fed," said Bank of America strategists, noting downside

risks to global growth remain relevant, not only due to trade

wars but also due to geopolitical developments.

"We are carefully monitoring fiscal policy across key

countries that can affect global interest rates. Unsustainable

fiscal dynamics can trigger an accident in bond markets," they

said in a note.

In commodities, oil prices inched higher to continue

recovering after a volatile month so far due to the conflict

between longtime rivals Israel and Iran.

Brent crude futures rose 0.2% to $67.82 a barrel,

while U.S. West Texas Intermediate crude (WTI) gained

0.28% to $65.1.

(Editing by Shri Navaratnam)