The US dollar fell against most major rivals on Wednesday as investors assess US President Trump’s tariff negotiations with major trading partners, including China.

The Trump administration granted countries a deadline until today to offer their best trade deals, while also imposing 50% tariffs on steel and aluminum imports. 

Trump is scheduled to talk to Chinese President Xi Jinping this week on the phone after both countries traded accusations of violating the trade agreement reached in Geneva. 

Data Returns to Forefront 

Economic indicators are back in the forefront this week, with the dollar index down 0.8% against a basket of major rivals after manufacturing data showed contraction, but it rebounded after an unexpected rise in job openings. 

The dollar was little changed against the yen at 143.95, while falling 0.16% against the franc to 0.8228.

The euro rose 0.21% on the greenback to $1.1395, before the ECB’s policy decision tomorrow.

Sterling rose 0.14% to $1.3539, with UK mineral exports exempted from the latest UK tariffs due to their trade agreement. 

The dollar index stayed unchanged at 99.12, an April low. 

Keeping on with other currencies, the Australian dollar rose 0.12% to $0.647, after data showed Australian GDP grew mildly in the first quarter.

The Canadian dollar was unchanged at 1.3714 against the greenback, as the Bank of Canada is expected to maintain interest rates unchanged.

China’s yuan has settled as well at 7.1886 against the dollar. 

South Korea’s won rose 0.9% to 1,365.4 against the dollar after the Liberal candidate won the presidential elections. 

Gold prices rose in European trade on Wednesday, resuming gains and approaching a four-week high as the dollar declined amid trade uncertainty between the US and China. 

It comes ahead of crucial US payrolls data, which would provide clues on the odds of the Fed rate cuts this year. 

Prices

Gold prices rose 0.6% today to $3372 an ounce, with a session-low at $3346.

On Tuesday, gold lost 0.85% on profit-taking away from a four-week high at $3392.

US Dollar

The dollar index fell 0.2% on Wednesday, resuming losses and approaching a six-week trough at 98.58 against a basket of major rivals.

Trade Developments

The Trump administration specified Wednesday as the deadline for best offers by other countries on the trade deals, and it’s the same day that the US implemented 50% tariffs on steel and aluminum. 

The White House also expects Trump to conduct a phone call with his Chinese counterpart this week after both sides traded accusations of violating the Geneva trade agreement. 

US Rates

Fed official Christopher Waller said rate cuts later this year are still possible even if Trump’s tariffs lead to price pressures.

According to the Fedwatch tool, the odds of a Fed 0.25% June interest rate cut stood at 2%, while the odds of a July rate cut stood at 24%.

Now traders expect 50 basis points of US rate cuts overall this year, starting October.

SPDR

Gold holdings at the SPDR Gold Trust rose 2.58 tons yesterday to a total of 935.65, the highest since May 13.

The euro inched down in European trade on Wednesday against a basket of major rivals, expanding losses for the second straight session and moving away from a six-week high on profit-taking amid risk aversion ahead of the European Central Bank’s policy meeting. 

As inflation in the eurozone dropped below the 2% target in May, it bolstered the odds of an ECB interest rate cut this week, for the seventh straight meeting.

The Price

The EUR/USD fell 0.1% today to $1.1365, with a session-high at $1.1393.

The euro closed down 0.6% on Tuesday against the dollar on profit-taking away from a six-week high at $1.1454.

The euro fell after eurozone data showed inflationary pressures receded more than expected last month.

European Inflation

The eurozone consumer prices rose 1.9% y/y in May, below estimates of 0.2%, and down from a 2.2% rise in April.

core prices, excluding food and energy, rose 2.3%, below estimates of 2.4%, and down from 2.7% in the previous reading. 

ECB

The European Central Bank is convening today and tomorrow to discuss the latest economic developments in the eurozone, and is widely expected to cut rates by 25 basis points to 2.15% to October 2022 lows. 

Markets are waiting for clues that the ECB will carry on its policy easing path throughout the year with more interest rate cuts. 

The Japanese yen fell in Asian trade on Wednesday against a basket of major rivals, extending losses for the second straight session against the US dollar amid a weak sentiment in the market as traders await the results of US President Trump’s negotiations with trade partners, including China. 

Recent Tokyo data showed increasing inflationary pressures on the Bank of Japan, which boosted the odds of a June interest rate hike by the Bank of Japan.

The Price

The USD/JPY price rose over 0.2% today to 144.29 yen per dollar, with a session-low at 143.67.

The yen lost 0.95% on Tuesday, the first loss in four days as the US attempted to calm trade tensions with China, and after strong US job opportunities data.

Trade Developments

The Trump administration specified Wednesday as the deadline for best offers by other countries on the trade deals, and it’s the same day that the US implemented 50% tariffs on steel and aluminum. 

The White House also expects Trump to conduct a phone call with his Chinese counterpart this week after both sides traded accusations of violating the Geneva trade agreement. 

US Dollar

The dollar index rose 0.1% on Wednesday against a basket of major rivals.

Recent US data showcased the strength of the labor market unexpectedly, with the Fed relying on such data to decide the path ahead for monetary policies. 

Japanese Rates

Earlier data showed consumer prices in Tokyo rose 3.6% y/y in May, the fastest pace since January 2023, and up from 3.4% in April.

Following the data, the odds of a BOJ 0.25% interest rate hike in June rose from 35% to 45%.

Bank of Japan Deputy Governor Shinichi Uchida said the bank will continue to raise interest rates if the economy recovers from the negative impact of US tariffs, however he still cautioned that the economic outlook remains highly uncertain.

Now traders await more Japanese data on inflation, unemployment, and wages to gather additional clues.