US Dollar Recovers, Euro Weakens After German Report
Investing.com– The US dollar edged higher on Friday, recovering from a sharp decline in the previous session, while the euro fell after weak German industrial orders.
Dollar Recovers After Sharp Selloff
At 05:45 ET (09:45 GMT), the Dollar Index, which tracks the greenback against a basket of six major currencies, was up 0.5% at 102.325, after falling nearly 2% to a six-month low on Thursday, marking its worst session since November 2022.
The dollar has rebounded slightly today after a sharp sell-off in the previous session, following news from President Donald Trump that he would impose a 10% tariff on all imports, along with higher country-specific tariffs of up to 54% on Chinese goods. These measures have reduced US Treasury yields and sent the dollar lower as investors sought safe-haven assets.
Despite the dollar's gains today, Deutsche Bank warned that there is a risk of a crisis of confidence in the global reserve currency. According to Deutsche Bank's George Saravelos, if there is a major shift in capital flows, the dollar's fundamentals could be displaced, causing currency moves to become disorderly.
US jobs report and Fed Chair Jerome Powell speech
The key March jobs report is due later today, with investors looking for indicators to gauge the health of the US economy. Concerns are growing about the impact of Trump's tariffs on growth and inflation.
Federal Reserve Chairman Jerome Powell is also scheduled to speak at a meeting later today, as the central bank faces the challenge of keeping inflation low amid rising recession risks.
Euro weakens after German economic data
In Europe, EUR/USD fell 0.7% to 1.0975, giving back some of the previous session's strong gains as the euro rose 1.8% - its biggest gain since November 2022. The common currency hit a high of 1.1147, its highest since late September last year, but is now facing resistance in the 1.11-1.12 area, according to analysis from ING.
German industrial data showed that industrial orders stagnated in February, with January data revised up. Although the German manufacturing sector showed signs of recovery in March, the recovery could still be slow.
GBP/USD and Other Currencies
The British pound also fell 1% to 1.2971 after hitting its highest since October in the previous session. GBP/USD may have some trouble sustaining those gains.
In Asia, USD/JPY rose 0.3% to 146.44, after falling 2% in the previous session. The Australian dollar (AUD) fell sharply by 1.9% to 0.6207 as investors shunned risky assets.
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