The dollar held steady against all major currencies on Monday, as exuberance over an upbeat US employment report gave way to caution ahead of pivotal US-China trade talks set to take place in London later in the day.
The talks come at a crucial time for both economies, with China grappling with deflation and trade uncertainty dampening sentiment among US businesses and consumers, prompting investors to reassess the dollar’s safe-haven status.
Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer are expected to represent the US at the trade talks, while vice premier He Lifeng would likely be present with the Chinese delegation.
“A deal to keep talking might be better than nothing, but unless we see a concrete breakthrough, the impact on sentiment is likely to remain muted,” said Charu Chanana, chief investment strategist at Saxo Markets.
Friday’s upbeat US jobs report yielded some relief for investors following other bleak economic data last week.
The dollar advanced against major peers after the employment report, which cut weekly declines in the dollar index by more than half. However, it is still down by more than 8.6 percent for the year.
On Monday, the yen firmed 0.10 percent at 144.750 per dollar, as data showed Japan’s economy contracted at a slower-than-expected pace in the January-March period.
The Swiss franc was steady at 0.8221 per dollar. The euro was last flat at $1.1399, while the sterling fetched $1.3535.
The dollar index, which measures the US currency against six others, was steady at 99.169. The yield on 10-year Treasury notes was flat in early Asia trading, after a more than 10 basis points jump on Friday.
