Dollar Jumps on Trade Hopes

By Kevin Buckland
TOKYO (Reuters) – The dollar jumped on Friday, recovering losses from the prior day after reports suggested China might weigh tariff exemptions for some U.S. goods, raising hopes for a de-escalation in the ongoing trade war between the world’s two largest economies.

The U.S. currency has experienced fluctuations this week, influenced by mixed signals regarding the relationship between Washington and Beijing.

On Tuesday, President Donald Trump hinted at de-escalation in their tariff battle and claimed that direct talks were underway. However, Beijing denied that discussions had commenced.

“Traders are definitely headline-chasing at the moment,” noted Bart Wakabayashi, Tokyo branch manager at State Street (NYSE:STT).

He added, “If there’s any sort of sign of an unwinding of these tariffs, there’s going to be an unwinding of positions that have been put in place because of them.”

On Friday, Bloomberg News reported that China is potentially considering suspending its 125% tariffs on U.S. medical equipment and some industrial chemicals.

As of 0435 GMT, the dollar climbed 0.7% to 143.665 yen and strengthened 0.6% to 0.8318 Swiss franc. The euro declined 0.5% to $1.1327 and sterling reduced by 0.4% to $1.3287.

The U.S. dollar index, measuring the currency against four rivals plus two other major counterparts, gained 0.4% to 99.792.

Earlier in the week, Trump had impacted the dollar by signaling threats to dismiss Fed Chair Jerome Powell for not cutting interest rates swiftly enough. The dollar then rose on Tuesday when he retracted any intention to replace the central bank chief.

Friday’s rally sets the dollar index on course for a 0.6% recovery, poised to end a four-week losing streak driven by fears of a recession induced by tariffs and declining investor confidence in U.S. assets due to Trump’s policy shifts.

While Washington is making progress in early trade talks with Asian allies South Korea and Japan, population discussions remain cautious. Seoul’s delegation noted aims to form a trade package before the reciprocal tariffs pause in July.

Japanese Finance Minister announced after meeting U.S. Treasury Secretary Scott Bessent that there were no currency target discussions. Earlier this month, Trump accused Tokyo of currency weakening to favor its exporters.

Japan’s chief negotiator, economy minister Ryosei Akazawa, is scheduled for a second round of trade talks with Bessent next week.

“If the perception spreads that a reduction in tariffs is near, it could positively influence negotiations with other countries, reducing risk sentiment and curtailing U.S. asset selling,” wrote Mizuho analysts. “This could buoy the dollar back to 145 yen. However, if negotiations seem challenging with Japan, one can only speculate on the situation with China.”

Bank of Japan Governor Kazuo Ueda reiterated the central bank’s commitment to raising interest rates if inflation trends toward the 2% target, yet underscored the need to assess the impact of U.S. tariffs.

Core consumer prices in Tokyo rose 3.4% in April from a year ago, showing an acceleration for the second consecutive month. The BOJ is widely expected to maintain current policy settings at its two-day meeting ending May 1.

Meanwhile, Bitcoin remained stable at around $93,200, hovering just below a peak of $94,489.92 reached on Wednesday, marking the highest level since March 3.