SINGAPORE, June 6 (Reuters) – The U.S. dollar is on track for a weekly decline as economic vulnerabilities in the United States weigh heavily, compounded by stalled trade negotiations with key partners. A critical focus for investors will be the upcoming U.S. nonfarm payrolls report, which could provide clarity amid recent weaker-than-expected economic indicators linked to President Donald Trump’s tariff policies.
Currency markets experienced volatility overnight, with major currencies initially gaining against the dollar on optimism following a lengthy call between Trump and Chinese leader Xi Jinping. However, these gains were pared later. The euro benefited from hawkish rhetoric by the European Central Bank (ECB) after a widely anticipated rate cut, reaching a 1-1/2-month high of $1.1495. It last traded at $1.1449, up 0.05%.
Nick Rees, head of macro research at Monex Europe, noted caution regarding ECB President Christine Lagarde’s hawkish stance, suggesting a revised outlook for future rate cuts. He now anticipates only one additional rate cut in September. Meanwhile, sterling edged up 0.1% to $1.3583, while the yen fell 0.1% to 143.74 per dollar. The dollar index remained steady at 98.72 but is set for a 0.7% weekly loss.
Investors are also concerned about the lack of progress in U.S. trade talks ahead of an early July deadline. The much-anticipated Trump-Xi call offered limited clarity, overshadowed by public disagreements involving Trump and Elon Musk. Elsewhere, the Australian dollar rose slightly to $0.6512, and the New Zealand dollar climbed to $0.6048, both on track for weekly gains.
— new from Reuters