Dollar rebounds from six-week low but tariff worries linger
The U.S. dollar rose on Tuesday, pulling back from a six-week low against the euro, even as investors remained concerned about potential economic damage from the trade war waged by President Donald Trump's administration.
The dollar was up 0.7% against the yen at 143.73. The euro fell 0.5% to $1.1386, having briefly touched a six-week high of $1.1454. Data earlier showed inflation in the euro zone slowed below the European Central Bank's target of 2%, underpinning expectations for a rate cut later this week.
For the year, the dollar is down about 9% against the euro.
While global equity markets have broadly recovered from an early-April selloff in the wake of the on-again, off-again saga of Trump's tariff threats, the greenback remains pressured.
U.S. duties on imported steel and aluminium are set to double to 50% starting on Wednesday, the same day the Trump administration expects countries to submit their best offers in trade negotiations.
Trump and Chinese President Xi Jinping were likely to have a call soon to iron out trade differences, Treasury Secretary Scott Bessent said on Sunday, although on Monday there was an from China's Commerce Ministry of U.S. accusations that Beijing violated their trade agreement.
On Tuesday, data showed U.S. job openings increased in April, but layoffs picked up in a move consistent with a slowing labor market amid a dimming economic outlook because of tariffs.
Fiscal worries have also given rise to a broad "sell America" theme that has seen dollar assets from stocks to Treasury bonds dropping in recent months.
Those concerns come into sharp focus this week as the Senate starts considering the administration's tax cut and spending bill, estimated to add $3.8 trillion to the federal government's $36.2 trillion in debt over the next decade.
Still, traders in the foreign exchange options market are positioned for the U.S. currency to weaken further.
The British pound was 0.3% lower at $1.35045 on Tuesday, ahead of a raft of Bank of England speakers and an auction of long-dated government bonds that may offer a gauge of investor confidence in Britain's finances.
Bitcoin, the world's largest cryptocurrency by market capitalisation, was 0.4% higher on the day at $105,364.
Source : Reuters
