Dollar poised for third weekly gain as tariff concerns ease
The U.S. dollar headed for a third straight weekly gain as signs of progress in Washington's talks with some of its trading partners and better-than-expected data eased concerns over investments in the world's largest economy.
The dollar, U.S. Treasuries and shares have bounced from steep declines last month as President Donald Trump's erratic tariff policies drove fears of a recession and sapped confidence in U.S. assets.
Wall Street rallied overnight, driven by positive tech earnings and a slightly better than expected manufacturing report even though it showed factory activity contracted further last month.
The focus now turns to the release of nonfarm payrolls figures later in the global day.
"Better data will lift U.S. 2 year Treasury yields, and see the USD and U.S. equity push higher, with the selling in gold accelerating," Chris Weston, head of research at Pepperstone, wrote in a note.
The dollar index was little changed in early Asia trading, poised for a 0.5% gain in a week of relatively light trading due to holidays. The greenback traded at 145.53 yen, just off a three-week high reached on Thursday.
The euro was little changed at $1.1290, near a three-week low. The Aussie dollar edged up 0.2% to $0.6396
Chinese state media said on Thursday the United States has approached China seeking talks over Trump's tariffs, potentially signaling Beijing's openness to negotiations.
Over in Japan, the nation's lead trade negotiator emerged from his latest round of talks in Washington telling reporters he wanted to hold another meeting in mid-May.
Overnight, data showed U.S. initial jobless claims in the latest week surged to a two-month high.
Market participants are now looking to the nonfarm payrolls report for an indication on when the Federal Reserve will resume cutting rates. Wall Street economists are forecasting 130,000 new jobs created last month, compared with a print of 228,000 seen in March.
"Our view is that the FOMC needs time and more data to assess the impact of tariffs on inflation," ANZ analysts said in a note to clients.
"As long as the labour market holds up, the FOMC will focus on inflation." (This story has been corrected to fix the month in comparative nonfarm payrolls data to March from February, in paragraph 11)
