Early trade in New York: dollar slips on hopes for a US-China trade compromise

The US dollar slipped on Friday morning as hopes for a US-China compromise on trade rose and traders pulled money from safe-haven assets. The Japanese yen and Swiss franc also ticked down as risk aversion abated, but investor optimism was cautious and moves across currencies were muted. The dollar was down 0.22% against a basket of six rival currencies but was 0.2% stronger against the yen and 0.41% stronger against the Swiss franc.
US President Donald Trump's tariff increase to 25% from 10% on $200 billion of Chinese goods kicked in on Friday, and Beijing said it would strike back. The two sides are pursuing last-ditch talks to try to salvage a trade deal. "There seems to be a sense in which FX traders are looking through the narratives and noise and betting on a cooling down, a compromise. So we're seeing interesting cross-currents in currency markets away from some of the safe-haven currencies that had been benefiting and towards some of the risk-sensitive, commodity-linked currencies in particular," said Karl Schamotta, director of FX strategy and structured products.
Elsewhere, the Canadian dollar was higher after employment data showed the country added a record 106,500 jobs in April, a gain that far outstripped analyst expectations. The loonie rallied the most since March, last half a percent stronger at $1.341.