Dollar Steadies Amid Trade Uncertainty: Fed and Market Eyes on US-China Relations

The dollar remained steady as investors awaited significant economic data and signs from ongoing U.S.-China trade negotiations. Despite recent volatility, conciliatory signals between the two nations have provided some temporary stability. Economists and investors monitor how these dynamics could affect U.S. job growth and potentially prompt Federal Reserve action.

The dollar's value held stable on Monday while investors anxiously anticipated developments in U.S. trade policies and upcoming economic data. These insights might reveal the domestic impact of U.S. President Donald Trump's ongoing trade war. At present, the dollar maintains a modest strength against the euro at $1.1346 and remains mostly steady against the yen at 143.45, although it heads for its largest monthly decline in over two years as the reliability of U.S. assets comes into question.

The dollar has decreased by more than 4% against both the euro and the yen throughout April. However, it rebounded at the end of last week following an apparent softening in U.S.-China trade tensions. Last week marked a potential thaw, with the Trump administration signaling willingness to lower tariffs, while China exempted certain imports from its attentively levied 125% duties.

Despite President Trump's assertions of progress and discussions with President Xi Jinping, Beijing has denied active trade talks. Treasury Secretary Scott Bessent offered no commentary on ongoing tariff discussions. As a result, investors are cautiously awaiting U.S. jobs data this Friday, hoping for job growth despite predictions of a slower pace compared to the previous month. Federal Reserve officials, including Chair Jerome Powell, have indicated potential rate cuts if growth risks are identified, prioritizing the real-economy impacts of tariffs—such as inflation and employment metrics—before taking actions.

(With inputs from agencies.)