Dollar Stabilizes Amid Trade War Easing Hopes and Yen Waits on BOJ Decision

The U.S. dollar held steady on Thursday, shrugging off weak domestic data as markets turned hopeful over signs of easing global trade tensions. Despite suffering its steepest monthly decline in over two years through April, the greenback regained ground as President Donald Trump hinted at potential trade deals with China, India, South Korea, and Japan.

In early Asian trading, the dollar rose 0.5% against both the euro and the pound, reaching $1.1328 per euro and $1.3323 per pound. It also climbed to 142.93 yen. Analysts see this as a short-term boost driven by speculation of de-escalating trade disputes. Richard Franulovich of Westpac noted, “We’re in a window here where we’re on a de-escalation path.”

Trump’s comments followed a statement by U.S. Trade Representative Jamieson Greer, who clarified that no formal trade talks with China are currently underway. Meanwhile, U.S. data revealed a surprise GDP contraction in Q1, largely due to a surge in imports ahead of tariff hikes. Yet, economists highlighted resilience in private consumption.

Investors are awaiting key U.S. jobless claims and ISM manufacturing data, but the spotlight is on Friday’s April jobs report, expected to show a hiring slowdown to 130,000. Market focus also turns to the Bank of Japan’s policy meeting, as uncertainty around the U.S.-Japan trade relationship and global economic conditions cloud Japan’s interest rate trajectory. No changes are expected, but any dovish signals could weaken the yen further.

The Australian dollar edged up 0.2% to $0.6413 following slightly higher-than-expected inflation data, while the New Zealand dollar remained stable at $0.5940, both showing resilience within their trading ranges.