Dollar Posts Weekly Gain as Tariff Questions Swirl
The dollar traded steady on Friday, with traders uncertain about the outlook for Donald Trump’s tariff policy after the president said he expected to speak to his Chinese counterpart Xi Jinping. Speculative traders boosted their bearish bets on the US currency.
The Bloomberg Dollar Spot Index was little changed after paring an earlier 0.3% gain; the dollar gauge rose 0.3% this week but was down by 0.7% in May and is set for its longest losing monthly streak since August 2020
“US data during the summer will provide the final verdict for the USD. If somehow the US economy keeps defying gravity, we would expect investors to start ignoring the policy noise and go back to buying US assets, supporting the USD; US exceptionalism would be back,” wrote Bank of America strategists Athanasios Vamvakidis and Claudio Piron. “However, if the US economy has a proper landing, we would expect the USD to weaken further to new lows for the year”
A proposed tax measure in a US tax-and-spending bill that could raise rates on individuals and companies from countries deemed to have “discriminatory” tax policies is also seen as a dollar headwind
USD/JPY fell 0.2% to 143.91; the pair was up 0.6% on a monthly basis
Faster-than-expected inflation in Tokyo supported the case for a Bank of Japan interest-rate hike
Data showed consumer prices excluding fresh food in Japan’s capital rose 3.6% y/y, exceeding the 3.5% increase estimated by economists
The yen received earlier a boost from falling stocks after Treasury Secretary Scott Bessent said trade talks with China are “a bit stalled”
EUR/USD slipped 0.1% to 1.1360 but is heading for a 0.3% rise on a monthly basis; the euro is up a fifth month for the first time since 2017
AUD/USD traded little changed at 0.6444; the Aussie rose 0.7% this month
An unexpected decline in Australian retail sales last month added to speculation the Reserve Bank may cut rates
GBP/USD fell 0.1% to 1.3475; the sterling gained 1.1% in May
USD/CAD fell 0.7% to 1.3714; the pair fell 0.6% in May
Canadian 1Q25 GDP came in higher than forecasts
The loonie was the best performing Group-of-10 currency versus the dollar
Source : Bloomberg
