The dollar (DX=F) opened steady on Monday as investors braced for a week of economic data that could provide the first glimpse into whether U.S. President Donald Trump’s trade war is having an impact.
The dollar, now at 143.57 yen and $1.1360 euro, has found its footing for now but remains on track for its biggest monthly drop in nearly 2-1/2 years as Trump shakes confidence in the reliability of U.S. assets [MKTS/GLOB]
Both the euro and yen are down more than 4% against the dollar so far in April, but the greenback rebounded against the yen at the end of last week as the tone of Sino-U.S. relations clearly shifted toward détente.
Last week, both sides appeared to retreat from the brink, with the Trump administration signaling a willingness to reduce tariffs and China exempting some imports from a 125% tariff.
However, despite Trump’s insistence that progress was being made in the talks and that he had spoken with President Xi Jinping, Beijing denied that trade talks were ongoing and U.S. Treasury Secretary Scott Bessant did not say on Sunday that tariff talks were ongoing.
“The next big question is whether all this volatility will impact real-world decision-making — particularly in the U.S. job market,” said Chris Turner, head of global markets at ING.
Investors are awaiting U.S. jobs data for April due on Friday, which is expected to show a sharp slowdown in hiring.
This week, the U.S. will also release first-quarter gross domestic product data and the Fed’s preferred inflation measure, core PCE, while Europe will also release GDP and preliminary inflation data.
Australian inflation data due on Wednesday is unlikely to affect the market’s already priced-in rate cut next month.
The Australian dollar is currently trading fairly close to recent highs against the U.S. dollar, trading just below $0.64 in early trading on Monday. The New Zealand dollar is also hovering just below $0.60 against the U.S. dollar. [AUD/]
“AUD/USD could break through resistance at 0.6464, but that level has been a strong resistance this month,” Joe Capurso, a strategist at Commonwealth Bank of Australia, said in a note to clients.
Canada will hold a general election on Monday, with the ruling Liberal Party slightly ahead in the polls but with a larger lead in online prediction markets. Options markets showed traders expected little volatility in currency trading, with the Canadian dollar steady at C$1.3874 to the greenback.
The Bank of Japan sets monetary policy on Thursday.
While markets will focus on the economic outlook and how policymakers plan to respond to an uncertain economic environment — especially as U.S.-Japan trade talks are expected to touch on currency issues — no policy changes are expected.
Japan’s top monetary diplomat, Atsushi Mimura, denied a report in the Yomiuri newspaper on Monday that Bessant said a weak dollar and a stronger yen were desirable during bilateral meetings with Japan.
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