US Dollar Faces Weekly Losses Amid Trade Tariff De-Escalation
markets analysis on behalf of Konstantinos Chrysikos Head of Customer Relationship Management at Kudotrade
The US Dollar remained under pressure, poised to end the week in negative territory as easing trade tensions boost risk appetite. Investor sentiment improved after the US rolled back tariffs on imports from Mexico and Canada, following Wednesday’s decision to halt a planned 25% levy on carmakers. In response, Canada’s finance minister announced that Canada would also delay retaliatory measures. This de-escalation in trade tensions could alleviate inflationary pressures, raising the prospect of a less restrictive monetary policy from the Federal Reserve.
However, today’s Nonfarm Payrolls and Fed Chair Jerome Powell’s speech could shape market direction. Following this week’s disappointing ADP employment data, further signs of labor market weakness may reinforce expectations of a dovish Fed, intensifying selling pressure on the greenback. Conversely, better-than-expected figures could provide temporary relief to the currency.
Meanwhile, US treasury yields declined, with the 10-year note hovering at 4.2%, reflecting cautious sentiment ahead of key economic data. A hawkish tone from Powell could lift yields, while dovish signals may drive them further down.
