The US dollar appreciated against major global currencies on Monday, as market participants shifted their attention to key inflation and retail sales data for April, alongside a scheduled appearance by Federal Reserve Chairman Jerome Powell.
Bolstering bullish sentiment for the dollar was the recent agreement between the United States and China to de-escalate trade tensions, with both countries consenting to a 90-day suspension of certain tariffs. Under this temporary truce, the US will reduce its tariffs from 145% to 30%, while China will scale back its own tariffs from 125% to 10%. This agreement has helped to alleviate concerns about the broader economic implications of the ongoing trade conflict.
According to Scotiabank, the 90-day pause in trade hostilities between the two largest economies has sparked a notable risk-on sentiment to begin the week.
Market watchers are particularly anticipating Tuesday’s economic releases, which include the NFIB Small Business Optimism Index for April, the Consumer Price Index (CPI) for April, and the weekly Redbook same-store sales figures. Additionally, investors will be monitoring remarks by Fed Chair Jerome Powell, who is expected to discuss the Federal Reserve’s ongoing review of its monetary policy framework. His comments are likely to provide direction for market sentiment following the Fed’s decision to maintain interest rates.
In early foreign exchange trading on Monday, the EUR/USD pair slipped to 1.1084 from Friday’s US close of 1.1252 and 1.1254 on Friday morning. There are no Eurozone economic releases scheduled for Monday, with the next European Central Bank (ECB) meeting set for June 4-5.
Similarly, the British pound weakened against the greenback, with GBP/USD falling to 1.3152 from 1.3307 at Friday’s US close and 1.3277 earlier that morning. Bank of England policy committee member Catherine Mann is slated to speak later in the day, and UK same-store sales data will be released at 7:01 pm ET. The Bank of England’s next monetary policy meeting is scheduled for June 19.
In Asia, the dollar advanced against the Japanese yen, with USD/JPY climbing to 148.1501 from 145.3252 at Friday’s US close and 145.1101 earlier that morning. Newly released data showed Japan’s current account surplus narrowed in March, while business sentiment in the services sector declined in April. The Bank of Japan’s next policy meeting is set for June 16-17.
In North America, the USD/CAD pair rose to 1.3981 from 1.3919 at Friday’s US close and 1.3890 earlier that day. Canada has no economic data releases scheduled for Monday, with the Bank of Canada’s next policy meeting slated for June 4.
