Dollar slides after the rally, Focus moves to the US-Chinese commercial discussions

By Johann M Cherian and Linda Pasquin

(Reuters)-The dollar slipped against all large currencies on Monday, because exuberance on a better employment report than fearing the United States gave way to caution before the chippecte-chinoise commercial discussions that will take place in London later during the day.

Translections occur at a crucial time for the two economies, China struggling with deflation and commercial uncertainty, the feeling of damping among American companies and consumers, encouraging investors to reassess the status of safe of the dollar.

Treasury secretary Scott Bessent, trade secretary Howard Lutnick and trade representative Jamieson Greer should represent the United States during commercial negotiations, while Deputy Prime Minister, He Lifeng, would probably be present with the Chinese delegation.

“The way in which commercial discussions take place will certainly be critical for the general feeling,” said Kit Juckes, FX chief strategist at Société Générale.

He said currencies in Asia-Pacific, including the Japanese Yen and Australian and New Zealand dollars, would probably see the greatest reaction to the titles of talks.

The dollar decreased by 0.55% compared to the Japanese currency, negotiating at 144.04 yen after two consecutive weeks of earnings.

In addition to commercial discussions, investors dealt with data showing that the Japanese economy contracts at a slower pace than expected during the period in January-March, while Prime Minister Shigeru Ishiba weighed on the interest rates of impact on the economy.

The euro increased by 0.34% and was the last to $ 1,1433 while the markets continued at prices from the monetary policy of the European Central Bank issued last week, in which it indicated that it could be close to the end of its softening cycle, while Sterling increased by 0.47% to $ 1.35814.

Elsewhere, the Yuan Offshore of China was the last at 7.1844 for a dollar after the data showed that China export growth has slowed down three months lower in May, while the deflation of factory doors have deepened at its worst level in two years.

The New Zealand dollar increased by 0.66% to $ 0.60,585, while the Australian dollar increased from the last from half a point to $ 0.6529 in light volumes because the markets were closed for a public holiday.

In Australia, a much healthier budgetary position than the United States, attractive yields and a “not too bad” economy should support the Aussia, unless there are negative titles from talks, Jackes said.

The commercial front was also a report which said that Japanese sales negotiator Ryosei Akazawa plans a sixth round of talks in Washington.

An inflation report on the United States for the month of May will be in the spotlight later in the week, investors and political decision-makers of the Federal Reserve are looking for evidence on the damage that restrictive policies have had on the economy.