US Dollar Soars as Trade Deal Optimism Continues; Yen Plunges

By Gertrude Chavez-Dreyfuss

NEW YORK (The News Pulse) – On Thursday, the U.S. dollar experienced further recovery due to technical buying following an over-sell-off during the previous month. Investors showed increased optimism regarding trade agreements struck between the United States and various trading partners.

The volume was lighter than typical due to numerous international markets being closed on Thursday for the May Day holiday.

At the same time, the yen weakened because the Bank of Japan reduced their economic growth predictions attributed to U.S. tariffs and maintained interest rates. This led to the currency falling to its lowest point in a month against the dollar, with the latter surging by 1.7% to reach 145.52 yen—a move poised for being the US Dollar’s biggest one-day increase since November 2024.

Against the euro, the yen dropped to a four-month low, with the single currency recently trading 1.4% higher at 164.29 yen. The euro was set to see its biggest one-day gain against the yen in two months.

The BOJ unanimously decided to keep interest rates steady as anticipated, yet their diminished economic forecast lowered expectations for upcoming rate increases. They currently anticipate core inflation will hit their 2% objective sometime during the second half of fiscal year 2026 and beyond, which is delayed by one year compared to what they projected in January.

In contrast, the dollar gained against many different currencies as investors assessed the likelihood of trade agreements with U.S. counterparts.

On Thursday, Treasury Secretary Scott Bessent and White House economic advisor Kevin Hassett conveyed optimism regarding potential de-escalation of trade disputes. Hassett informed CNBC that informal talks had taken place across both administrations concerning the tariffs. He also noted that China’s reduction of levies on certain American products last week signifies forward movement.

On Wednesday, President Donald Trump mentioned that "possible" trade agreements with India, South Korea, and Japan are forthcoming, along with a strong likelihood of securing a deal with China too.

"The Trump administration has begun to recognize that they may have been too aggressive with the implementation of tariffs, and now they are attempting to portray an image of openness towards possible negotiations," explained Jayati Bharadwaj, who serves as a global FX strategist at TD Securities based in New York.

A social media account linked to Chinese state media stated on Thursday that the U.S. has reached out to China for discussions regarding the 145% tariffs imposed under the Trump administration, indicating that this might suggest Beijing’s willingness to engage in talks.

During midday trading, the euro dropped to its lowest point against the US dollar in three weeks, decreasing by 0.4% to trade at $1.1286. Similarly, sterling declined by 0.4%, reaching $1.3284.

Versus the Swiss franc, the dollar rose 0.6% to trade at 0.8311 franc.

The de-dollarization trend from the past month seems to have subsided," stated Erik Bregar, who leads FX & precious metals risk management at Silver Gold Bull in Toronto. "Generally speaking, the value of the dollar is tracking movements in Treasury notes. As soon as the bond selloff slowed down, we saw an increase in the strength of the dollar too.

NON-FARM EMPLOYMENT FIGURES, ADDITIONAL UNITED STATES STATISTICS

Now, market players are focusing on this Friday’s U.S. nonfarm payrolls (NFP) data to gauge potential timing for the Federal Reserve’s next interest rate cuts. According to forecasts from Wall Street analysts, approximately 130,000 new positions were added last month, down from the 228,000 reported in March.

"As the NFP survey took place a few weeks back, it probably indicates merely a deceleration in hiring with not many direct job cuts, since companies generally halted further recruitment pending greater clarity regarding the specifics and timeframe of the ‘Freedom Day’ tariffs," noted Matthew Weller, who leads global research at FOREX.com and City Index, in his sent remarks.

However, Thursday’s data indicated ongoing weakness.

In the most recent week, U.S. initial jobless claims rose sharply, reaching their peak in two months. The number of applications for unemployment aid climbed by 18,000 to reach 241,000 as of April 26th, marking the highest level seen since early February.

An independent report indicated that U.S. manufacturing continued to decline in April. Additionally, tariffs imposed on imported products exacerbated strains within supply chains, driving up costs for input materials and maintaining concerns about stagflation.

The Institute for Supply Management's (ISM) manufacturing Purchasing Managers' Index (PMI) fell to a five-month low of 48.7, marginally exceeding expectations from analysts who had anticipated a decline to 48. This figure contrasts with March’s reading of 49.0. It's important to remember that a PMI value under 50 signifies a reduction in activity within the sector. According to forecasts gathered by The News Pulse, economists were predicting the index would drop to around 48.

In other currencies, the Australian dollar declined relative to the U.S. dollar following a robust April during which it reached several multi-month highs. The Aussie was last trading 0.3% lower at US$0.6385, receiving some support lately from an unexpectedly higher-than-projected inflation report.

Currency

bid

prices at

1 May​

07:43

p.m. GMT

Description RIC Latest U.S. % YTD % High Low

On Close Change Bid Bid

Previous

Session

Dollar $100.19 $99.672 +0.53% -7.65% $100.37 $99.6

index 11

Euro/Dollar 1.1287 1.1329 -0.35% 9.04% $1.1341 $1.13

ar 266

Dollar/Ye 145.59 143.02 1.84% -7.44% 145.725 142

n 94

Euro/Yen 164.36 161.97 1.48% 0.7% 164.45 161.97

82

Dollar/Sw 0.8298 0.8266 0.41% -8.55% 0.8333 0.82

iss 57

Sterling/ 1.3281 1.3335 -0.42% 6.17% $1.3345 $1.33

Dollar 261​

Dollar/Ca 1.3836 1.3798 0.28% -3.78% 1.3862 1.37

nadian 85

Aussie/Do 0.6386 0.6403 -0.23% 3.24% $0.6428 $0.63

llar 368

Euro/Swiss 0.9367 0.9356 0.12% -0.28% 0.9395 0.93

s 45

Euro/Ster 0.8499 0.8498 0.01% 2.73% 0.851 0.84

ling 81

NZ 0.5909 0.5937 -0.44% 5.64% $0.5951 0.58

Dollar/Do 94

llar

Dollar/No 10.4329 10.3884 0.43% -8.21% 10.4678 10.3

rway 918

Euro/Norw 11.7782 11.7701 0.07% 0.08% 11.819 11.7

ay 723

Dollar/Sw 9.7482 9.6567 0.95% -11.52% 9.7819 9.65

eden 56

Euro/Sweden 11.0048 10.942 0.58% -4.03% 11.0235 10.9

en 309

(This May 1 story has been corrected to fix the month in the comparative nonfarm payroll data to March from February, in paragraph 14.)

(Reported by Gertrude Chavez-Dreyfuss; Extra reporting provided by Samuel Indyk in London and Tom Westbrook in Singapore; Edited by Mark Heinrich, Gareth Jones, Kirsten Donovan, and Diane Craft)