Amanda Cooper and Koh Gui Qing
New York/London (Reuters) – The U.S. dollar slipped on Friday and was set for its biggest weekly loss in more than a year after President Donald Trump proposed a softer stance on tariffs against China, adding to uncertainty about trade policy that has kept capital markets that kept stock markets on edge.
Trump told Fox News on Thursday that his recent conversation with President Xi Jinping was friendly and he thought he could reach a trade deal with China.
“We have one very big power over China, which is tariffs, and they don’t want them, and I’d rather not have to use it, but it’s a huge power over China,” he said.
The US dollar fell as much as 0.8% against a basket of currencies on Friday, before paring losses to end the day down 0.65%. But it still had its biggest weekly loss since November 2023, losing 1.8% since Monday.
Some analysts have warned that the dollar could rise again if US tariff and interest rate policies move.
“We think the dollar is going up further,” said Simon Macadam, deputy chief global economist at Capital Economics.
“His appreciation so far has also reflected the strength of economic data in the US relative to peer economies and investors’ assessment of Trump’s policies, both of which have contributed to a shift in interest rate differentials that has been favorable to the dollar.”
MSCI’s index of world stocks ended little changed, while stocks on Wall Street were underwhelming. The S&P 500 declined 0.3%, the Dow Jones industrial average lost 0.3% and the NASDAQ composite shed 0.5%.
Chinese stocks and currencies rallied on the back of Trump’s comments, leaving the blue-chip index down 0.8% and the yuan gaining against the dollar, which fell 0.7% to 7.239 in the offshore market.
Oil prices stabilized and pared losses after Trump said he would ask Saudi Arabia and OPEC to lower oil prices.
U.S. crude futures rose to $74.66 a barrel and Brent crude rose 0.3% to $78.50.
Low oil price benefits
Amelie DeRambure, senior multi-asset portfolio manager at Amundi in Paris, said Trump’s pro-American policies require lower oil prices.
“These types of policies could also benefit other players in the world, like Europe, for example, if we have a lower oil price that will benefit Europe as well – so finally there is something that Europe wants to implement that is not harmful to it,” she said.
“It shows that he is willing to negotiate and that he wants to be maybe a little more subtle this time.”
