Dollar Set for Weekly Gain Amid Trade Talk Optimism

TOKYO: The U.S. dollar is on track to record its third consecutive week of gains. This upward trend is supported by encouraging signals from discussions between Washington and its trade partners, coupled with stronger-than-anticipated economic data. These factors have alleviated concerns regarding investments within the United States, the world’s leading economy.

The dollar, U.S. Treasury securities, and equities have rebounded following substantial declines experienced last month. These previous drops were fueled by President Donald Trump’s unpredictable tariff policies, which stoked fears of a potential recession and diminished confidence in U.S. assets.

Wall Street saw a surge overnight, propelled by robust technology sector earnings and a slightly better-than-forecast manufacturing report, despite the report indicating a continued contraction in factory activity during the past month.

Attention is now directed towards the impending release of nonfarm payrolls data later in the day.

According to Chris Weston, head of research at Pepperstone, positive data is expected to elevate U.S. 2-year Treasury yields, subsequently driving the USD and U.S. equity markets higher, while simultaneously accelerating selling activity in gold.

The dollar index remained relatively stable in early Asian trading sessions, positioning it for a 0.5% increase over a week characterized by reduced trading volumes due to holiday observances. The dollar was trading at 145.53 yen, slightly below a three-week peak attained on Thursday.

The euro experienced minimal change at $1.1290, hovering near a three-week low. The Australian dollar saw a modest increase of 0.2%, reaching $0.6396.

Reports indicate that the United States has reached out to China seeking discussions concerning Trump’s tariffs, suggesting a potential willingness from Beijing to engage in negotiations.

Japan’s chief trade negotiator indicated his intention to schedule another meeting in mid-May, following his latest round of discussions in Washington.

Dollar Strengthens After GDP Contraction

Recent figures revealed that U.S. initial jobless claims for the most recent week reached a two-month high.

Market participants are keenly awaiting the nonfarm payrolls report to gain insights into when the Federal Reserve might resume its rate-cutting measures. Economists predict the creation of 130,000 new jobs last month, in contrast to the 228,000 jobs reported in February.

Analysts at ANZ stated that the FOMC requires additional time and data to fully assess the implications of tariffs on inflation.

They added that the FOMC would primarily focus on inflation, provided the labor market remains stable.