Dollar battered by a combination of tariff fears, bond market concerns and soft economic data

The dollar slumped to its lowest level in six weeks against its major peers at the start of the week, with the currency battered by a combination of tariff fears, bond market concerns and soft economic data.

Last week, President Trump both expressed annoyance that China was failing to live up to its trade commitments (possibly hinting at a return to higher tariffs), while doubling US tariffs to 50% on the steel and aluminium sectors. The recent US court ruling (that has since been paused) only pertains to the President’s reciprocal tariffs and, as mentioned last week, will not stop the White House from doubling down on its sectoral import levies - more pain could be on the way here, with the pharmaceutical, electronics and airline sectors next in the firing line.

We saw a mild pullback in the greenback on Tuesday. There wasn’t necessarily one clear catalyst for the move, although we did see yet further signs of resilience in the US labour market in the latest JOLTS jobs report. Job openings unexpectedly jumped to 7.391 million in April, defying calls for a drop to 7.1M.

The May ADP employment change number (Wednesday) and weekly jobless claims figures (Thursday) will act as a prelude to Friday’s payrolls report, where economists are eyeing a slowdown in job creation to around the 130k mark. In the meantime, investors will be keeping close tabs on today’s PMI figures from ISM.