Dollar Shows Resilience Amid Cooling Trade War Signs

Despite weak U.S. data, the dollar steadied as investors anticipated a cooling trade war and awaited U.S. job data. April saw the dollar's largest fall in 2.5 years due to tariff uncertainties. However, potential trade deals with major economies have boosted confidence. Hiring is expected to slow.

Despite disappointing U.S. data, the dollar remained stable Thursday as investors took heart from indications of a possible easing in trade tensions. Currency markets eagerly await Friday's U.S. jobs report for more clarity.

April marked the dollar's most significant monthly decline in two and a half years, as President Donald Trump's fluctuating tariff strategy impacted growth projections and market sentiment. However, the dollar has regained some footing amid optimistic signals, including the suspension of some tariffs and potential trade agreements with countries such as China—the highest tariff target. Overnight trading saw the dollar gain 0.5% against the euro and a similar rise against the British pound.

Richard Franulovich, Westpac's head of currency strategy in Sydney, noted the current trend towards de-escalation in trade tensions. President Trump stated on television that trade negotiations with India, South Korea, and Japan could enhance trade, and a deal with China is promising. However, formal talks with China are yet to commence, according to U.S. Trade Representative Jamieson Greer.

(With inputs from agencies.)