The dollar remained steady on Monday as investors awaited further updates on U.S. trade policy and prepared for a week filled with economic data that could offer insight into the impact of President Donald Trump’s trade war.
The dollar traded modestly stronger against the euro at $1.1346 and was mostly unchanged against the yen at 143.45. Despite these modest gains, the dollar is still on track for its largest monthly decline in nearly two and a half years, driven by concerns over the reliability of U.S. assets amid ongoing trade tensions.
Through April, the dollar has fallen more than 4% against both the euro and the yen, although it rebounded at the end of last week following signs of a potential easing in U.S.-China relations. Both sides appeared to soften their stances last week, with the Trump administration signaling a willingness to reduce tariffs and China exempting certain imports from its 125% tariffs.
However, despite claims of progress from Trump, Beijing has denied that trade talks are taking place, and on Sunday, Treasury Secretary Scott Bessent did not confirm any ongoing discussions on tariffs.
Investors are now closely watching April’s U.S. jobs report, due on Friday, for any signs of the trade war’s impact on the U.S. labor market. Although job growth is still expected, it is anticipated to slow significantly compared to the previous month.
Federal Reserve officials have indicated that they may be willing to cut interest rates if there are clear signs of growth risks. However, most appear cautious about acting too quickly and prefer to wait for concrete data on inflation and employment before making any policy changes.
This week also brings the release of first-quarter GDP data for the U.S. and the Federal Reserve’s preferred inflation measure, core PCE. Preliminary inflation figures are also due in Europe. The euro held steady against other major currencies, including the pound, despite news of a widespread power outage across much of Spain on Monday.
Meanwhile, Canada’s federal election on Monday saw the ruling Liberal Party holding a narrow lead in polls, with options markets indicating that traders do not expect significant volatility in the Canadian dollar, which was steady at C$1.3873 per U.S. dollar.
In Japan, the Bank of Japan will announce its monetary policy decision on Thursday. No change in policy is expected, but market attention will focus on the outlook and the Bank’s strategy for navigating an uncertain economic environment, particularly as trade talks between the U.S. and Japan are expected to address currency issues.
Japan’s top currency diplomat, Atsushi Mimura, denied a report on Monday that U.S. Treasury Secretary Scott Bessent had expressed a preference for a weak dollar and strong yen during bilateral talks.
