Dollar Pauses as Traders Watch US Jobs Report
The US dollar steadied on Monday as investors focused on economic data expected later in the week, with the upcoming US jobs report and inflation readings set to reveal whether the trade tensions sparked by President Trump are starting to impact the economy. Meanwhile, markets weighed a mix of cautious optimism in US–China talks and volatility in global currencies.
Dollar Holds Ground Ahead of US Jobs Report
Traders paused heavy dollar selling early in the week, awaiting critical US jobs report figures set for release on Friday. The greenback found support at 143.57 yen and $1.1360 per euro after weeks of volatility. Despite this temporary stability, the dollar remains on track for its biggest monthly drop in more than two years, reflecting shaken confidence in US assets.
Over April, the dollar declined more than 4% against both the euro and the yen. Last week saw a slight bounce after a perceived easing in US–China rhetoric, with both countries demonstrating a willingness to reduce tariffs. The Trump administration hinted at openness to softening its approach, while China exempted some imports from steep levies.
Uncertainty Surrounding US–China Talks
Although President Trump insisted on progress in discussions with President Xi Jinping, Chinese officials denied that meaningful trade talks are presently underway. US Treasury Secretary Scott Bessent also refrained from confirming any active negotiations. This uncertainty leaves the market on edge, as currency traders look for evidence that the ongoing dispute is impacting real-world decisions and, importantly, the US jobs market.
Chris Turner, ING’s global head of markets, suggests, “The next big chapter will be whether all this volatility has hit real-world decisions – especially in the US jobs market.” This statement raises the stakes for the upcoming US jobs report, which is widely seen as a key gauge of economic resilience amid trade uncertainty.
High-Stakes Week for Economic Data
The focus this week is squarely on the US jobs report, along with data on gross domestic product (GDP) growth and the Federal Reserve’s preferred inflation gauge, the core Personal Consumption Expenditures (PCE) index. Markets also await GDP and preliminary inflation figures from Europe, adding to the busy schedule.
A sharp slowdown in hiring is expected in Friday’s US jobs report, which could signal broader effects of trade tensions. These results will be pivotal for investor confidence in US economic strength and could drive currency moves in the days ahead.
Global Currencies Respond to Economic Outlook
Currency markets globally are reacting to the evolving economic landscape. The Australian dollar remained near its recent highs, trading just below $0.64, with traders watching for this week’s domestic inflation reading. However, with a rate cut widely anticipated next month, most see little risk of surprises from the Reserve Bank of Australia.
Similarly, the New Zealand dollar traded just shy of $0.60. Commonwealth Bank of Australia strategist Joe Capurso told clients, “AUD/USD could trade above resistance at 0.6464, but it’s been a strong resistance level this month.” This suggests that the Australian dollar’s movement will likely be capped unless there is a major surprise in economic data.
Canadian and Japanese Factors
Monday also marks a significant political moment as Canadians head to the polls. Polling indicates a slim lead for the ruling Liberal Party. Yet, currency traders expect little volatility, with the Canadian dollar holding steady at C$1.3874 per US dollar. Options markets show a lack of appetite for substantial moves in the loonie, despite the election.
In Japan, the Bank of Japan will announce monetary policy on Thursday. While no changes are expected, market participants eagerly await the central bank’s outlook as it navigates a delicate economic environment. US–Japan trade discussions are also anticipated to touch on currency topics, especially as speculation swirls over preferences for a stronger yen or weaker US dollar.
Japanese top currency diplomat Atsushi Mimura on Monday denied reports suggesting that Treasury Secretary Bessent had called for a weaker dollar and stronger yen during talks with Japanese officials. This has helped cool some of the speculation, but the market remains alert.
Why the US Jobs Report Matters for Dollar Traders
The focus on the US jobs report reflects its influence on global markets and currency trends. The monthly release provides investors with a sense of hiring trends and wage growth, both critical signs of the health of the world’s largest economy.
A weaker-than-expected reading could mean that trade war impacts are trickling down to the real economy, likely pressuring the dollar further. Conversely, unexpectedly strong data would signal resilience, giving the dollar fresh reason to rally.
What to Watch as the Week Progresses
As we approach Friday, all eyes are on the delicate dance between trade talks, economic reports, and central bank decisions. The US jobs report, inflation figures, and GDP stats will not only shake up currency markets but also influence how central banks shape their policies in the coming months.
For those trading the dollar, the big question looms: Will the numbers reveal cracks from Trump’s trade war, or will the US job market hold strong, just as the president insists? Investors are bracing for answers that could set the tone for the weeks ahead.
Source
Reuters – Dollar sellers pause with eye on US jobs
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