Dollar slips after ECB hints at rates pause
NEW YORK: The dollar slipped against the euro on Thursday after the European Central Bank hinted at a pause in its year-long policy easing cycle and US data pointed to softening labor market conditions amid mounting economic headwinds from tariffs.
The ECB cut interest rates for the eighth time in a year on Thursday, acknowledging inflation was under control and turning more pessimistic about economic prospects amid risks of a trade war with the United States.
While not confirming a pause, the central bank said it was now well-positioned to cope with global economic uncertainty, as market bets grew on a summer break in its year-long easing cycle.
'With today's cut and the current level of interest rates... I think we are getting to the end of a monetary policy cycle that was responding to compounded shocks, including COVID, including the war in Ukraine, the illegitimate war in Ukraine, and the energy crisis,' ECB President Christine Lagarde said.
The euro rose 0.5% to $1.1473, a fresh six-week high against the dollar, not far from the more than 3-year high of $1.1573 touched in April.
'The euro-dollar has taken off here in response to Lagarde saying the ECB is getting towards the end of its rate cutting cycle,' said Shaun Osborne, chief currency strategist at Scotiabank.
The dollar's softer tone was an extension of its recent weakness, with the US currency down nearly 10% against the euro for the year.
'This just broadly reflects the softening in the broader dollar sentiment here and may well continue into non-farm payrolls tomorrow,' Osborne said.
'We are also seeing a little bit of volatility around news of President Trump talking to Xi, in a first sign of high-level communication between the White House and Beijing in quite some time,' Osborne said.
Chinese President Xi Jinping on Thursday held talks with Donald Trump by phone, China's state-run news agency Xinhua reported, as bilateral relations have been strained by trade disputes.
The dollar also came under pressure after data showed the number of Americans filing new applications for unemployment benefits last week increased for a second straight week, pointing to softening labor market conditions amid mounting economic headwinds from tariffs.
The claims data have no bearing on the Labor Department's closely watched employment report for May, scheduled to be released on Friday, as it falls outside the survey period.
Sterling was 0.3% higher against the dollar on Thursday. The United Kingdom is the only country to have struck a trade deal with the Trump administration and was spared from higher US steel and aluminium tariffs, though analysts question how beneficial those factors are.
Bitcoin, the world's largest cryptocurrency by market capitalisation, was 0.5% lower on the day at $104,021.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
2 hours ago
- Business Recorder
Trump says fresh US-China trade talks in London next week
WASHINGTON: US President Donald Trump on Friday announced a new round of trade talks with China in London next week, a day after calling Chinese counterpart Xi Jinping in a bid to end a bitter battle over tariffs. US-China trade truce 'The meeting should go very well,' said Trump, adding that Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer would meet a Chinese team in the British capital on Monday.
Express Tribune
2 hours ago
- Express Tribune
Trump not interested in talks with Elon Musk: White House
US President Donald Trump and Elon Musk attend a press conference in the Oval Office of the White House in Washington, DC, US, May 30, 2025. PHOTO:REUTERS Listen to article US President Donald Trump is not interested in talking with Elon Musk, a White House official said on Friday, signaling the president and his former ally might not resolve their feud over a sweeping tax-cut bill any time soon. The White House official, speaking on condition of anonymity, said no phone call between Trump and the Tesla CEO was planned for the day. Earlier, a different White House official had said the two were going to talk. In interviews with several US media outlets, Trump said he was focused on other matters. "I'm not even thinking about Elon. He's got a problem, the poor guy's got a problem," he told CNN. Trump may get rid of the red Tesla Model S that he bought in March after showcasing Musk's electric cars on the White House lawn, the official said. Musk, for his part, did not directly address Trump but kept up his criticism of the massive Republican tax and spending bill that contains much of Trump's domestic agenda. On his social-media platform X, Musk amplified remarks made by others that Trump's "big beautiful bill" would hurt Republicans politically and add to the nation's $36.2 trillion debt. He replied "exactly" to a post by another X user that said Musk had criticized Congress and Trump had responded by criticizing Musk personally. The White House statements came one day after the two men battled openly in an extraordinary display of hostilities that marked a stark end to a close alliance. During the exchange, Trump suggested he would terminate government contracts with Musk's businesses, which include rocket company SpaceX and its satellite unit Starlink. Tesla shares rose on Friday, managing to claw back some steep losses from the previous session when it dropped 14% and lost $150 billion in value, the largest single-day decline in the company's history. Musk's high-profile allies have largely stayed silent during the feud. But one, investor James Fishback, called on Musk to apologize. "President Trump has shown grace and patience at a time when Elon's behavior is disappointing and frankly downright disturbing," Fishback said in a statement. Musk, the world's richest man, bankrolled a large part of Trump's 2024 presidential campaign. Trump named Musk to head up a controversial effort to downsize the federal workforce and slash spending. Trump feted Musk at the White House a week ago as he wrapped up his role as head of the Department of Government Efficiency. Musk cut only about half of 1% of total spending, far short of his brash plans to axe $2 trillion from the federal budget. Since then, Musk has denounced Trump's tax-cut and spending bill as a "disgusting abomination." His opposition is complicating efforts to pass the bill in Congress where Republicans hold a slim majority. Trump's bill narrowly passed the House of Representatives last month and is now before the Senate, where Republicans say they will make further changes. Nonpartisan analysts say the measure would add $2.4 trillion in debt over 10 years. House Speaker Mike Johnson said he has been texting with Musk and hopes the dispute is resolved quickly. "I don't argue with him about how to build rockets and I wish he wouldn't argue with me about how to craft legislation and pass it," Johnson said on CNBC. 'Very disappointed' Trump had initially stayed quiet while Musk campaigned to torpedo the bill, but broke his silence on Thursday, telling reporters he was "very disappointed" in Musk. The pair then traded barbs on their social media platforms. Musk, who spent nearly $300 million in last year's elections, said Trump would have lost without his support. Musk also asserted that Trump's signature import tariffs would push the US into a recession and responded "Yes" to a post on X saying Trump should be impeached. That would be highly unlikely given Trump's Republicans hold majorities in both chambers of Congress. Musk's SpaceX plays a critical role in the US government's space program. When Trump posted that he might cancel Musk's contracts, the billionaire responded he would begin decommissioning SpaceX's Dragon spacecraft, the only US spacecraft capable of sending astronauts to the International Space Station. Later, Musk backed off that threat. In a sign of a possible detente, Musk subsequently wrote: "You're not wrong" in response to billionaire investor Bill Ackman saying Trump and Musk should make peace. A prolonged feud could make it harder for Republicans to keep control of Congress in next year's midterm elections if Musk withholds financial support or other major Silicon Valley business leaders distance themselves from Trump. Musk had already said he planned to curtail his political spending, and on Tuesday he called for "all politicians who betrayed the American people" to be fired next year. His involvement with the Trump administration has provoked widespread protests at Tesla sites, driving down sales while investors fretted that Musk's attention was too divided.
Business Recorder
4 hours ago
- Business Recorder
Surprise jobs gain helps Canadian dollar hold on to weekly move higher
TORONTO: The Canadian dollar edged lower against its U.S. counterpart on Friday but was holding on to a weekly gain, as stronger-than-expected domestic jobs data bolstered expectations the Bank of Canada would keep rates on hold next month. The loonie was trading nearly 0.1% lower at 1.3685 per U.S. dollar, or 73.07 U.S. cents, after moving in a range of 1.3661 to 1.3704. On Thursday, the currency touched an eight-month high at 1.3632, while it was on track for a weekly gain of 0.4%. Canada's economy added 8,800 jobs last month, compared to an expected decline of 12,500. The unemployment rate, however, climbed to 7%, its highest level in almost nine years, excluding the peak of the COVID-19 pandemic. 'A lot of part-time jobs were lost and they became full-time jobs. Net-net I think it's a good thing,' said Marc Chandler,chief market strategist at Bannockburn Global Forex LLC. 'It's also clear that the Bank of Canada is not going to be in a hurry to cut rates again. There still might be another rate cut coming but later this year.' Investors see a 73% chance the BoC keeps its benchmark interest rate on hold at 2.75% in July, up from 67% before the data. On Wednesday, the central bank refrained from cutting rates for a second straight meeting, citing the need to study the effects of U.S. trade policy. U.S. jobs data was also stronger than expected, which boosted the U.S. dollar against a basket of major currencies. The price of oil, one of Canada's major exports, rose on optimism about U.S.-China trade talks. U.S. crude oil futures traded nearly 2% higher at $64.62 a barrel. Canadian bond yields moved higher across the curve, tracking moves in U.S. Treasuries. The 10-year was up 7.2 basis points at 3.327%, trading at its highest level since May 26.
