Dollar Pressured by Trade Tensions and U.S. Jobs Data Anticipation
The U.S. dollar came under slight pressure on Wednesday as financial markets adopted a cautious tone ahead of key labor market data. This weakness was amplified by renewed trade frictions, particularly following the enforcement of increased tariffs on steel and aluminum imports, signaling potential volatility ahead.
The Trump administration’s decision to double tariffs on steel and aluminum imports—bringing them to 50%—took effect as of Wednesday, coinciding with the expiration of a deadline for trade partners to submit revised offers. These developments have heightened concerns over further escalation in trade disputes, especially with China.
Anticipation is also building around a potential phone call between President Donald Trump and Chinese President Xi Jinping, after both sides accused each other of breaching a previous tariff agreement. These geopolitical tensions are contributing to growing market unease.
In currency markets, the dollar slipped 0.09% against the Japanese yen to 143.82, while the euro edged higher by 0.13% to reach $1.1385. Meanwhile, the U.S. Dollar Index, which tracks the greenback against six major currencies, remained stable at 99.159.
Traders are closely watching the ADP employment report, due later in the day, ahead of the highly anticipated non-farm payrolls data set for release on Friday. These figures are critical for assessing the health of the U.S. labor market and gauging the future direction of Federal Reserve policy.
Despite stronger-than-expected job openings data from the U.S. Department of Labor, a softer ADP projection suggests that the dollar and Treasury yields may face short-term headwinds unless a surprise upside materializes.
Elsewhere, the Australian dollar held steady at $0.6460 ahead of the release of GDP data. The South Korean won appreciated by 0.2% to 1375.25 per dollar following the presidential election victory of liberal candidate Lee Jae-myung, which added a note of political stability to the region.
The dollar’s current movement reflects the market’s sensitivity to both economic data and geopolitical risks. With key employment figures looming and global trade dynamics in flux, short-term volatility in currency markets is likely to persist.
