The U.S. dollar remained under pressure on Friday, hovering near a four-month low, as ongoing uncertainty over tariff policies exacerbated concerns about the future growth of the U.S. economy. Investors are now eagerly awaiting the release of crucial jobs data later in the day to gauge the strength of the labor market.
President Donald Trump’s latest announcement to delay tariffs on Mexico and Canada provided little relief, keeping the Japanese yen near its strongest levels against the dollar since early October. Meanwhile, the U.S. dollar also dropped to a three-month low against the Swiss franc, trading at 0.8820 franc in early sessions.
Following Trump’s tariff reprieve, the dollar weakened against both the Canadian dollar and the Mexican peso. The reprieve is set to expire on April 2, when Trump has indicated he will impose reciprocal tariffs on all U.S. trading partners, heightening uncertainty about the future direction of trade policy.
Kieran Williams, head of Asia FX at InTouch Capital Markets, noted that the dollar’s status as a safe-haven currency has been waning due to growing uncertainty. “The signs that U.S. exceptionalism is on the wane continue to increase,” Williams said, adding that the inflationary impact of tariffs is no longer enough to prop up the greenback.
As markets await the U.S. nonfarm payrolls report, the focus shifts to whether the country is experiencing a slowdown in growth. “Ahead of the NFP survey, evidence has tilted towards a softer outcome. If this transpires, it could spook markets further,” Williams added.
Economists expect the U.S. to have added around 160,000 jobs in February, up from 143,000 in January, with the unemployment rate likely holding steady at 4.0%. However, the latest data from global outplacement firm Challenger, Gray & Christmas showed a sharp rise in job cuts, particularly from federal government agencies. The firm reported 62,242 announced job cuts in February, and total planned layoffs surged to 172,017—numbers not seen since the last two recessions.
Federal Reserve Chairman Jerome Powell will address the economic outlook later in the day, following the jobs report. Markets are currently pricing in approximately 77 basis points worth of rate cuts by the central bank this year.
Wage Increases and Global Currency Movements
The U.S. dollar index, which tracks the greenback against six major currencies, dipped 0.05% to 104.15. The euro was relatively unchanged at $1.0790 after climbing to a four-month high in the previous session, buoyed by rising European bond yields following Germany’s substantial spending plan and the European Central Bank’s revised inflation forecast. The euro is on track for its biggest weekly gain since March 2009, up 4% on the week so far.
Sterling held steady at $1.28845, while the dollar dipped 0.09% against the Japanese yen, trading at 147.86. The yen gained further momentum after Japan’s largest labor union group demanded the biggest wage increase in over three decades, fueling speculation that the Bank of Japan may raise interest rates.
The risk-sensitive Australian dollar remained flat at $0.63291, after reaching $0.6364 on Thursday, its highest level since February 24.
In the cryptocurrency market, Bitcoin fell 4.61% to $85,354.63. The decline came after White House crypto czar David Sacks announced that Trump had signed an executive order to establish a strategic bitcoin reserve, funded by assets seized from criminal or civil asset forfeiture proceedings.
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