The US dollar rose in European trade on Monday against a basket of major rivals, moving higher for the second straight session and about to scale multi-week highs amid a positive sentiment in the global financial markets with increasing signs about trade deals between the US and major trade partners. 

Now markets await a batch of important US data later today, expected to provide important clues on the odds of a Fed rate cut in the first half of the year.

The Index

The dollar index rose 0.25% today to 99.84, with a session-low at 99.46.

On Friday, the index rose 0.3%, the third profit in four days, moving away from three-year lows at 97.92.

The index rallied 0.4% last week, the first weekly profit in five weeks on concerns about US recession and the independence of the Federal Reserve.

Reports indicated that China is considering tariff exemptions for some US products.

Chinese officials also asked the US to remove unilateral tariffs on China as a prerequisite for any trade negotiations. 

Trump already stated that trade talks are currently ongoing with China, despite the latter’s assertions that no official talks are currently taking place.

US Rates

Several Fed officials recently signalled there’s no need to cut interest rates soon as the Fed continues to analyze new data to gauge the impact of US tariffs on the economy.

According to the Fedwatch tool, the odds of a 0.25% Fed interest rate cut stand at only 9%, while the odds of such a cut in June stand at 63%.

Gold prices lost over 1.5% in European trade on Monday, extending the losses for the second straight session and about to hit two-week lows under pressure from the stronger dollar.

Safe haven demand on the precious  metal also slowed  down as US-China trade tensions  receded, while risk appetite improved around the world.

The Price

Gold prices fell 1.55% today to $3268 an ounce, with a session-high at $3331.

On Friday, gold  lost 0.9%, the third loss  in four days on profit-taking away  from a record high at $3500.

The precious metal lost 0.25% last week,  the first weekly loss in  three weeks as haven demand wobbled.

US Dollar

The dollar index rose 0.25% on Monday, extending gains for the second straight session against a basket of major rivals.

A stronger dollar makes the greenback-denominated gold futures costlier to holders of other  currencies.

The dollar’s latest rebound comes as concerns about a US recession receded with increasing positive signals about the global trade tensions.

Trade Developments

Reports indicated that China is considering tariff exemptions for some US products.

Chinese officials also asked the US to remove unilateral tariffs on China as a prerequisite for any trade negotiations. 

Trump already stated that trade talks are currently ongoing with China, despite the latter’s assertions that no official talks are currently taking place.

US Rates

Several Fed officials recently signalled there’s no need to cut interest rates soon as the Fed continues to analyze new data to gauge the impact of US tariffs on the economy.

According to the Fedwatch tool, the odds of a 0.25% Fed interest rate cut stand at only 9%, while the odds of such a cut in June stand at 63%.

SPDR

Gold holdings at the SPDR Gold Trust fell 2.29 tons on Friday to a total of 946.27 tons, the lowest  since April 9.

The Japanese yen fell in Asian trade on Monday against a basket of major rivals, extending losses for the second straight session against the dollar and about to plumb two-week lows amid calm trading. 

It comes as intense trade negotiations between Japan and the US progress in hopes of reaching a suitable deal for both sides.

The Bank of Japan is convening this week to discuss monetary policies appropriate for the latest economic developments, and is widely expected to maintain interest rates unchanged.

The Price

The USD/JPY pair rose 0.2% today to 143.88 yen per dollar, with a session-low at 143.53.

The yen lost 0.75% on Friday, the third loss in four days, plumbing two-week lows at 144.03 on hopes for the success of the trade negotiations. 

The yen lost 1.1% last week against the dollar, the first weekly loss in a month as haven demand on the yen slowed down with Trump aiming to calm and assure the global markets.

Trade Negotiations 

Traders are closely monitoring any developments in US trade negotiations, especially as Trump sought to rule out any extension to the pause on high tariffs.

Asian countries such as Japan and South Korea are seeking to make temporary deals to avoid the imposition of the strict US tariffs before the 90-day pause ends in early July.

US Treasury Secretary Scott Bessent said the Trump administration is working on making trade deals with 17 trade partners, excepting China.

He reasserted the administration’s position that economic pressure will force China to the negotiation table, as they couldn’t handle 145% US tariffs.

US President Donald Trump said his team is very close to making a trade deal with Japan, however, Japan’s officials  dismissed reports about talks to fix or change the forex rate between the yen and the dollar.

BOJ

The Bank of Japan is convening this week to discuss the monetary policies, expected to hold interest rates flat at 0.5%, the highest since  2008.

The BOJ will discuss the impact of the US trade war on the exports-reliant Japanese economy, which could determine the pace of rate hikes in the near future.

US stock indices rallied on Friday on optimism about the US-China trade dispute while the markets focused on corporate results.

Wall Street was boosted recently as the trade war risks receded after US President Donald Trump signalled a potential lessening of tariffs on Chinese goods.

A Bloomberg report also indicated the Chinese government is considering tariff exemptions for some US products.

This week, quarterly results by Tesla, IBM, Alphabet, and Intel were released, and were mostly positive, but they all gave up weak forecasts for this year.

The Consumer Confidence index from the University of Michigan dropped 8.4% this month to 52.2 from March’s 57.

Dow Jones closed 0.1% higher at 40113 points, marking a weekly profit of 2%.

S&P 500 rose 0.7%, or 40 points to 5525 points, with a weekly profit of 4%.

NASDAQ surged 1.3% to 17,383 points, with a weekly gain of 6%.