Dollar mixed against other major currencies ahead of US data
The U.S. dollar traded mixed overall on Monday, falling against the yen and sterling, but posting gains versus the Swiss franc, as investors waited warily for further news of U.S. trade policy and braced for a week packed with economic data.
This week's economic reports may give a first glimpse of whether U.S. President Donald Trump's trade war is hitting home.
"This is the calm before the storm. We're consolidating, trading broadly sideways today mostly within Friday's ranges," said Marc Chandler, chief market strategist, at Bannockburn Global Forex in New York.
"The big stuff still lies ahead this week. We have largely seen soft survey data, but this week we will see evidence that weakness has crept into the real sector data such as Q1 GDP (gross domestic product) and that's before the tariffs."
For now, the dollar has found its footing, trading little changed against the euro at $1.1365 and rising 0.2% versus the Swiss franc to 0.8280 franc.
It was down 0.5% versus the yen at 142.99 yen, headed for its largest monthly fall in nearly 2-1/2 years as Trump has rattled confidence in the dependability of U.S. assets.
The euro, on the other hand, was on track for its largest monthly gain against the dollar since November 2022. The greenback did trim monthly losses against both the euro and yen toward the end of last week amid an apparent conciliatory shift in the tone of U.S.-China relations.
Both sides seemed to soften their respective stances, with the Trump administration signalling openness to reducing tariffs and China exempting some imports from its 125% levies.
Yet where Trump insists there has been progress, and that he has spoken with President Xi Jinping, Beijing has denied trade talks are occurring and on Sunday, Treasury Secretary Scott Bessent did not say that tariff talks were under way.
On Monday, Bessent said top U.S. trading partners had made "very good" proposals to avert U.S. tariffs, and one of the first deals to be signed would likely be with India.
As for China, the top Treasury official said "all aspects of government are in contact with China," and underscored that it was up to China to reduce tensions since it sold five times more goods to the United States than vice versa.
Investors are also awaiting the April U.S. jobs report, due on Friday, where jobs growth is still expected, although at a sharply slower pace than a month earlier.
Federal Reserve officials including Chair Jerome Powell have indicated they would be willing to cut interest rates if it becomes clear there are risks to growth. But most appear content to first determine what impact Trump's tariffs have on real-economy metrics such as inflation and employment before making a move.
"So unless the hard data — particularly jobs and consumption — clearly rolls over, the Fed is unlikely to act before July. They need real deterioration to justify a move, not just forecasts or soft indicators," Saxo Bank chief investment strategist Charu Chanana said.
The U.S. also releases first-quarter GDP data and the Federal Reserve's favored inflation gauge, core PCE, this week, while GDP and preliminary inflation figures are also due in Europe.
Source: Reuters
