US dollar resumes losses under pressure from trade risks
The US dollar fell in European trade on Thursday against a basket of major rivals, resuming losses after a two-day hiatus and approaching three-month lows once more under pressure from US-China trade war concerns.
Trade tensions remain between both sides amid mixed signals from US President Donald Trump on his plans for the China tariffs.
The Index
The dollar index fell 0.55% today to 99.25, with a session-high at 99.84.
On Wednesday, the index rose 0.7%, the second profit in a row away from three-year lows at 97.92.
The index also rose after positive remarks by Trump on China and Jerome Powell.
Mixed Signals
Trump asserted the US goal of reaching a fair trade deal with China, however, he once more threatened new tariffs on Beijing if no deal is reached.
US Treasury Secretary Scott Bessent said Trump didn’t propose to unilaterally remove tariffs from China, asserting the US will not cut tariffs on China by over 100%.
Bessent said there’s no clear timeline for communications between both sides, with the process of complete trade rebalancing potentially taking two or three years.
The markets are beginning to see the Trump’s administration’s sensitivity towards the performance of the financial markets, with decisions such pausing reciprocal tariffs and backing off plans to sack Fed Chair Powell as reflections of such considerations.
US Rates
Chicago Fed President Austin Goolsbey said he hopes the US won’t turn into an environment where the Fed’s ability to set monetary policies independently from political pressure is undermined.
According to the Fedwatch tool, the odds of a May Fed 0.25% rate cut stood at 7%.
The odds of such a cut in June stood at 62%.
Gold rebounds as dollar stalls
Gold prices rose in European trade on Thursday, resuming gains after a two-day hiatus as the price collected profits off recent record highs, with today’s advance bolstered by renewed haven demand as the dollar stalls.
US-China trade tensions remain a point of worry amid mixed signals from US President Donald Trump on his plans for the China tariffs.
The Price
Gold prices rose 2.4% today to $3367 an ounce, with a session-low at $3288.
On Wednesday, gold lost 2.75%, the biggest loss in 2025 on profit-taking away from a record high at $3500.
Gold was also pressured by a strong dollar rebound after positive remarks from Trump on Jerome Powell and China.
The US Dollar
The dollar index fell 0.25% today against a basket of major rivals following two days of gains and recovery.
Trump asserted the US goal of reaching a fair trade deal with China, however, he once more threatened new tariffs on Beijing if no deal is reached.
US Treasury Secretary Scott Bessent said Trump didn’t propose to unilaterally remove tariffs from China, asserting the US will not cut tariffs on China by over 100%.
Bessent said there’s no clear timeline for communications between both sides, with the process of complete trade rebalancing potentially taking two or three years.
The markets are beginning to see the Trump’s administration’s sensitivity towards the performance of the financial markets, with decisions such pausing reciprocal tariffs and backing off plans to sack Fed Chair Powell as reflections of such considerations.
US Rates
Chicago Fed President Austin Goolsbey said he hopes the US won’t turn into an environment where the Fed’s ability to set monetary policies independently from political pressure is undermined.
According to the Fedwatch tool, the odds of a May Fed 0.25% rate cut stood at 7%.
The odds of such a cut in June stood at 62%.
SPDR
Gold holdings at the SPDR Gold Trust rose 1.44 tons yesterday to a total of 949.14 tons.
Euro tries to regain footing as the dollar faces risks
The euro rose in European trade on Thursday against a basket of major rivals, resuming gains against the dollar after a two-day hiatus and heading once more towards four-year highs as the dollar continues to face risks.
Chief of which are the ongoing US-China trade tensions amid mixed signals from US President Donald Trump on his plans for the China tariffs.
The Price
The EUR/USD price rose 0.4% to $1.1357, with a session-low at $1.1313.
The price fell 0.9% on Wednesday, the second loss in a row on profit-taking away from a four-year nadir at $1.1573.
The euro also lost ground after Trump’s assurances that he won’t sack Fed Chair Jerome Powell, and following grim eurozone services data.
Mixed Signals
Trump asserted the US goal of reaching a fair trade deal with China, however, he once more threatened new tariffs on Beijing if no deal is reached.
US Treasury Secretary Scott Bessent said Trump didn’t propose to unilaterally remove tariffs from China, asserting the US will not cut tariffs on China by over 100%.
Bessent said there’s no clear timeline for communications between both sides, with the process of complete trade rebalancing potentially taking two or three years.
The markets are beginning to see the Trump’s administration’s sensitivity towards the performance of the financial markets, with decisions such pausing reciprocal tariffs and backing off plans to sack Fed Chair Powell as reflections of such considerations.
European Rates
Reports indicated that several European Central Bank governors see a high chance of a rate cut in June.
President of the Deutsche Bundesbank Joachim Nagel said that German recession this year can’t be ruled out.
European Central Bank President Christine Lagarde said the impact of tariffs could be seen on the PMI and unemployment numbers.
Lagarde expects the tariffs to have more of a deflationary role on prices rather than inflationary.
Markets are currently pricing in a 60% chance of an ECB interest rate cut in June.
Yen rebounds once more as investors assess trade risks
The Japanese yen rose in Asian trade on Thursday against a basket of major rivals, resuming gains against the dollar after a two-day hiatus amid renewed haven demand on the currency as investors assess trade risks between the US and China.
Global momentum took a gradual back seat after a recovery surge, amid mixed signals from US President Donald Trump on his plans with the China tariffs.
Reports indicate the Bank of Japan will likely dismiss risks from US tariffs on the cycle of higher wages and inflation, crucial for continuing to raise interest rates.
The Price
The USD/JPY price fell 0.55% today to 142.60 yen per dollar, with a session-low at 142.60.
The yen lost 1.3% on Wednesday against the dollar, the second loss in a row, and the heftiest since December 2024, marking a week low at 143.57 as the global markets rebounded.
Mixed Signals
Trump asserted the US goal of reaching a fair trade deal with China, however, he once more threatened new tariffs on Beijing if no deal is reached.
US Treasury Secretary Scott Bessent said Trump didn’t propose to unilaterally remove tariffs from China, asserting the US will not cut tariffs on China by over 100%.
Bessent said there’s no clear timeline for communications between both sides, with the process of complete trade rebalancing potentially taking two or three years.
The markets are beginning to see the Trump’s administration’s sensitivity towards the performance of the financial markets, with decisions such pausing reciprocal tariffs and backing off plans to sack Fed Chair Powell as reflections of such considerations.
Bank of Japan
The Bank of Japan is widely expected to hold interest rates steady at this month’s policy meeting, while dismissing the impact of US tariffs on the current cycle of increasing wages and inflation.
The BOJ is likely to maintain its goal of gradual interest rate hikes in the future amid efforts to normalize the monetary policy.