LONDON :The euro slipped on Friday after European inflation data came in lower than expected and as a U.S. tariff deadline loomed, while the dollar ticked higher as investors waited for U.S. price figures later in the day.
Data showed inflation in France and Spain was cooler than analysts expected in March, causing traders to increase their bets on further European Central Bank rate cuts. Separate figures showed French consumer spending fell, and Germany’s unemployment rate ticked higher.
The euro was last down 0.28 per cent at $1.0772, although it remains around 3.8 per cent higher for the month after Germany announced a huge borrowing overhaul as it seeks to spend more on defence, and as the dollar has fallen on U.S. growth concerns.
Aside from economic data, investors were focused on the looming April 2 date on which U.S. President Donald Trump has said he will lay out reciprocal tariffs on America’s major trading partners. Trump on Wednesday announced a 25 per cent tariff on imported cars and light trucks, starting next week.
“Trump tariff uncertainty is driving markets, with investors waiting for the April 2 details,” said Mohit Kumar, a senior economist at Jefferies.
“We… think that the initial announcement would open the door for further negotiations and the final impact of tariffs would not be as bad as feared.”
The U.S. dollar index, which tracks the currency against six major peers, was last up 0.22 per cent at 104.47.
It was nonetheless on track for its biggest monthly fall – at 2.9 per cent – since November 2023 as investors have become concerned Trump’s stop-start tariffs will dent the U.S. economy.
INFLATION DATA
Traders at 1230 GMT (8.30 a.m. ET) will turn their attention to U.S. personal consumption expenditures index inflation data, the Federal Reserve’s preferred price gauge.
Analysts polled by Reuters expect year-on-year inflation to have held steady at 2.5 per cent in February.
Markets are currently pricing in around 63 basis points of rate cuts from the Fed this year but a higher or lower reading could shift the dial.
The dollar was 0.13 per cent lower against the yen at 150.84 per dollar, with the Japanese currency buoyed by sticky Tokyo inflation data.
Derek Halpenny, head of research at MUFG, said the yen was also likely being boosted by investors looking for safe havens. European stocks and U.S. futures dipped on Friday.
“Foreign exchange moves are reasonably contained so far this morning but there are signs of increased risk aversion amongst global investors following the auto tariff announcements… and ahead of the reciprocal tariff announcements,” he said.
Sterling was down 0.2 per cent at $1.2923 after rising almost 0.5 per cent in the previous session. British officials hope the UK might be able to achieve a carve-out from some of Trump’s tariffs given the two countries’ more balanced trading positions.
