The U.S. dollar wavered on Friday, heading toward its fifth consecutive monthly loss as uncertainty around trade policy and fiscal stability rattled markets ahead of key inflation data. The greenback faced a volatile week, dropping after a federal appeals court reinstated President Trump’s sweeping tariffs, just a day after a lower court had blocked them.
Trump voiced hope that the Supreme Court would uphold his tariff plans, while White House officials suggested alternative legal routes to enforce the measures. The escalating tariff drama has triggered investor flight from U.S. assets, fueling concerns about market volatility under Trump’s unpredictable policies.
Kyle Rodda of Capital.com noted the court ruling opened “a new source of uncertainty” rather than resolving tensions. The euro held firm at $1.1378, while the Swiss franc was steady at 0.8225 per dollar. The greenback is on pace to post monthly losses against major currencies including the euro, pound, and franc.
Economic data released Thursday, including jobless claims and GDP figures, failed to ease recession fears. Investors now await the Fed’s preferred inflation gauge—the personal consumption expenditures (PCE) index—which is expected to show a 2.2% rise in April, down slightly from March’s 2.3%.
Concerns over sovereign debt are also weighing on sentiment, following weak demand for long-term bonds in both the U.S. and Japan. The dollar index edged up 0.16% to 99.416 but remains down 0.25% for May.
The Japanese yen rose 0.3% to 143.80 per dollar after Tokyo inflation data surpassed expectations, boosting rate hike speculation. However, the yen is still set for its first monthly loss against the dollar in 2025.
Meanwhile, emerging market currencies posted strong gains, with their index up 2.2%—its best monthly performance since November 2023.