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Posted on Apr 10, 2018 at 11:28 PM
Investors will be closely watching trade related developments in the coming week after renewed jitters over trade tensions between the U.S. and China sent the dollar sliding on Friday.
Friday’s Chinese trade data will be in the spotlight with traders watching to see if recent strong gains in exports continued in March.
Wednesday’s U.S. inflation data will also be closely watched after the latest employment report showed that pace of jobs growth slowed last month, even as wage growth picked up slightly.
The dollar fell against a basket of the other major currencies on Friday as fresh fears over the prospect of a trade war between the world’s two largest economies weighed and a mixed U.S. jobs report did little to alter the monetary policy outlook.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.33% to 89.82 in late trade.
The dollar slid after China said it was prepared to hit back “forcefully” if U.S. President Donald Trump followed through on a threat to impose $100 billion in additional tariffs on imports.
Worries that protectionist trade policies might result in a full-blown trade war have fuelled fears over the impact on the global economy and U.S. growth.
The dollar had already come under pressure earlier after the Labour Department reported that the U.S. economy added the fewest jobs in six months in March as poor weather dampened hiring. However, wage growth picked up slightly, indicating that the labour market is continuing to tighten.
The employment report left the outlook for monetary policy little changed. The Federal Reserve raised interest rates last month and forecast two more rate hikes this year.
The dollar was lower against the yen, with USD/JPY down 0.42% to 106.93 in late trade. The Japanese yen, typically viewed as a safe-haven currency, tends to be sought out by investors during times of political or economic uncertainty.
The dollar was also lower against the traditional safe haven Swiss franc, with USD/CHF losing 0.49% to trade at 0.9589.
The euro pushed higher against the softer greenback, with EUR/USD rising 0.33% to 1.2281.
Sterling was the strongest gainer among the major currencies, with GBP/USD advancing 0.61% to 1.4087.
The pound has strengthened since Britain last month agreed terms with the European Union for a Brexit transition deal and the Bank of England indicated that interest rates will rise in the coming months.
The pound was also higher against the euro, with EUR/GBP down 0.31% to 0.8714 late Friday.
The UK is to release data on industrial and manufacturing output this week and the European Central Bank is to publish the minutes of its March meeting on Wednesday.
The Fed is also to publish the minutes of its March meeting on Wednesday which will be closely watched for any fresh insights on the pace of U.S. monetary tightening.