Stock market today: S&P 500 falls as inflation, mixed bank earnings weigh
Investing.com - The U.S. dollar slipped lower Friday, handing back some of the previous session’s gains with attention turning to the July 9 deadline for U.S. trade deals.
At 04:15 ET (08:15 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.2% lower to 96.605, on course for minor weekly losses despite climbing 0.4% on Thursday.
U.S. markets are closed Friday for the Independence Day holiday.
Dollar slips on trade uncertainty
The U.S. currency rallied on Thursday after stronger than expected U.S. jobs data pushed out the timing for potential rate cuts by the Federal Reserve.
However, these gains have proved short-lived as attention has shifted to the ongoing trade negotiations between the U.S. and a substantial number of its trading partners, with hefty tariffs set to take effect on July 9.
So far only three agreements have been announced, and U.S. President Donald Trump raised the tensions once more by announcing on Thursday that many countries will get letters on Friday specifying what tariff rates they will face, marking a shift from earlier pledges to ink individual deals with trading partners.
“It seems the market is bracing for some more tariff-related volatility,” said analysts at ING, in a note. “That can be seen in the term structure of the traded FX options market, where EUR/USD volatility remains elevated for the next three weeks before starting to edge lower for the rest of the year.”
Elsewhere, the Republican-controlled House of Representatives narrowly passed Trump’s massive tax-and-spending bill that is estimated to add $3.4 trillion to the nation’s $36.2 trillion debt.
Trump is expected to sign the bill into law on Friday.
Euro set for weekly gains
In Europe, EUR/USD gained 0.1% to 1.1774, with the single currency poised for a 0.5% weekly gain.
Data released earlier Friday showed that German industrial orders fell much more than expected in May, dropping by 1.4% on the previous month on a seasonally and calendar adjusted basis.
The European Central Bank cut rates for the eighth time in a year last month, but the policymakers indicated they would likely pause at its next meeting.
“We are starting to hear a little more from the European Central Bank about the strength of the euro,” said ING. “The general view seems to be that a quick EUR/USD move through 1.20 would be a concern.”
GBP/USD gained 0.1% to 1.3664, with sterling set for a negative week given concerns about Britain’s finances after the government backed down on welfare reforms.
Yen bounced after overnight losses
In Asia, USD/JPY traded 0.4% lower to 144.36, after household spending data for May read stronger than expected, pointing to continued inflationary pressures in the country.
But the yen clocked steep overnight losses on Thursday.
USD/CNY slipped 0.1% lower to 7.1644, after Beijing outlined more stimulus plans, with new measures aimed at boosting the country’s slowing birth rate.
Signs of improving trade relations with the U.S., after Washington rescinded some chip export controls on China, did little to support the yuan this week, as did mixed purchasing managers index data.
China signaled on Friday that it was reviewing export licenses for domestic rare earth firms, acknowledging the U.S.’ lifting of its chip export controls.