EMERGING MARKETS-FX firm, stocks mixed as markets await Trump's tax bill, trade deals

By Ragini Mathur and Purvi Agarwal

July 1 (Reuters) - Most emerging market currencies steadied on Tuesday on a weaker dollar amid concerns over U.S. President Donald Trump's tax bill, while stocks were mixed as investors awaited developments in U.S. trade negotiations.

The dollar index =USD languished at its lowest since March 2022 as a debate in the Senate over a bill estimated to add $3.3 trillion to the United States' already mounting debt pile weighed on sentiment.

Investors were also monitoring trade negotiations with the U.S., as Trump's July 9 tariff deadline loomed. A report said India could finalise a deal as soon as this week, whereas talks with Japan took a turn with Trump warning of higher tariffs.

"The mood music has been increasingly supportive, reassuring investors that several deals are set to be announced beforehand. For now at least, the market consensus is that we're not going to see a huge shock next week," said Deutsche Bank analysts led by Jim Reid.

MSCI's index tracking global EM currencies .MIEM00000CUS edged up 0.1% in a positive start to July, after rounding off six months of gains.

Emerging Europe currencies were largely subdued against the euro. The Hungarian forint EURHUF=, however, was down 0.3%.

Hungary's seasonally-adjusted Purchasing Managers' Index showed a return to contraction in June. Poland and Turkey's PMI data also fell in the last month of June.

Poland's central bank started its two-day monetary policy meeting, and is set to announce its decision on Wednesday.

Poland's currency EURPLN= was little changed while the Turkish lira TRYTOM=D3 was flat against the dollar.

In the Middle East, Turkish stocks .XU100 were 0.5% higher. Israel's shekel ILS= gained slightly, after posting its best quarter on record on Monday.

Israeli stocks .TA125 were up 0.9%, posting another record high.

South Africa's rand ZAR= appreciated 0.8%. It has logged gains of over 6.5% so far in 2025, after recording declines for the last five years.

The country has asked for more time to negotiate a trade deal with Trump's administration ahead of the deadline.

MSCI's global EM stocks gauge .MSCIEF was up 0.5%. Regional stocks in Europe were mixed, with those in Poland .WIG20 and Romania .BETI up 0.4% and 0.6% respectively, while shares in Hungary .BUX were flat.

The International Monetary Fund said on Monday it had completed its eighth review of Ukraine's $15.5 billion four-year support program, paving the way for a disbursement of an additional $500 million to the war-torn country.

Elsewhere in EMs, Thai stocks .SETI jumped 1.7% after a local court suspended the prime minister from duty, pending a case seeking her dismissal.

On the data front, job opening figures for May are due in the United States, while more activity data in Latin America will be watched.

HIGHLIGHTS:

** Indonesia exports surge ahead of tariff talk deadline, inflation subdued

** China's factory activity returns to growth in June, Caixin PMI shows

** India's factory growth hits 14-month high on exports surge, PMI shows

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