TOKYO: The U.S. dollar wallowed near a four-month low on Friday as ever-shifting tariff policies fanned uncertainty and increased concern about growth prospects for the world’s largest economy, leaving investors grasping for jobs data due later in the day.
Another reprieve of levies aimed at Mexico and Canada announced by U.S. President Donald Trump on Thursday offered little relief, keeping the safe-haven yen not far off its strongest against the greenback since early October.
Against the Swiss franc, the dollar dropped to a three-month low of 0.8820 franc in early trade.
The greenback also lost some ground against the Canadian dollar and Mexican peso following the announcement.
The reprieve expires on April 2 when Trump said he will impose reciprocal tariffs on all U.S. trading partners.
“The signs that U.S. exceptionalism is on the wane continue to increase” and the dollar has “fallen out of favour” amid the uncertainty, with the perceived inflationary impact of tariffs no longer enough to support it, said Kieran Williams, head of Asia FX at InTouch Capital Markets.
Focus on Friday falls on U.S. nonfarm payrolls numbers as market participants assess whether the United States is headed for a cool-down in growth.
“Ahead of the NFP survey, evidence has tilted towards a softer outcome. If this transpires it could spook markets further,” said Williams.
Against a backdrop of federal job culls, the U.S. likely added 160,000 jobs in February compared with 143,000 in January, while the unemployment rate likely held steady at 4.0%, economists forecast in a Reuters poll.
On Thursday, global outplacement firm Challenger, Gray & Christmas said it tracked 62,242 announced job cuts by the federal government from 17 different agencies in February.
Planned layoffs soared to 172,017 in February, partly reflecting federal government layoffs - numbers not seen since the last two recessions, Challenger said.
Federal Reserve Chair Jerome Powell will be able to follow up the jobs report when he speaks later in the day on the economic outlook. Markets currently have about 77 basis points’ worth of central bank interest rate cuts priced in for the rest of the year.
Wage hikes
The U.S. dollar index , which measures the greenback against six major rivals, fell 0.05% to 104.15.
The euro was little changed at $1.0790 after strengthening to its highest in four months in the previous session, buoyed by surging European bond yields on the back of Germany’s massive spending proposal and the European Central Bank’s raising of its near-term inflation forecast.
Dollar slides as trade war risk recedes
The euro bloc currency was eying its biggest weekly gain since March 2009, up 4% on the week so far.
Sterling was little changed at $1.28845.
Against the Japanese currency, the dollar was last down 0.09% at 147.86 yen . Japan’s largest labour union umbrella group is seeing its member unions demand the biggest salary increase in over 30 years, asking for a wage hike of more than 6%, the group said on Thursday, buoying bets that the Bank of Japan will increase interest rates.
Elsewhere, the risk-sensitive Australian dollar was nearly flat at $0.63291 after appreciating to $0.6364 on Thursday, its highest since February 24.
In cryptocurrencies, bitcoin was down 4.61% at $85,354.63.
White House crypto czar David Sacks announced in a post on X that Trump signed an executive order on Thursday to establish a strategic bitcoin reserve capitalised with bitcoin from criminal or civil asset forfeiture proceedings.
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