Gold is 2025’s best performer. UBS sees more upside
Investing.com - The U.S. dollar edged higher Thursday, but remained on the backfoot given trade uncertainties and weak economic data, while the euro steadied ahead of a European Central Bank policy meeting.
At 04:10 ET (08:10 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, climbed 0.1% to 98.802, but has dropped about 9% this year, and is poised for its weakest yearly performance since 2017.
Dollar suffering this year
The dollar has struggled this year as U.S. President Donald Trump has announced a slate of tariffs on countries around the globe, potentially disrupting global trade and weighing on economic growth.
A United States deadline for "best offers" on trade came and went on Wednesday without any trade announcements. Trade talks go on, but the lack of deals suggest most nations have not been cowed by the threat of tariffs, indicating more tough negotiations to come.
At the same time, weak U.S. economic data has revived fears of slow growth and high inflation.
Reports this week have found that U.S. private employers added fewer jobs than anticipated in May, while job openings grew in April, although layoffs increased.
The weekly jobless claims figures are due later in the session, setting up Friday’s all-important monthly nonfarm payrolls report, which is projected to show that the U.S. added 130,000 jobs in May -- falling from 177,000 in April.
ECB meeting due
In Europe, EUR/USD traded largely unchanged at 1.1417, not far removed from the six-week high seen at the start of the week, even as the European Central Bank meets to put the finishing touches to its latest interest rate cut.
The ECB is widely-expected to cut interest rates by a quarter point later Thursday, its eighth cut reduction in just over a year, as inflation has fallen below the central bank’s 2.0% target and economic growth in the eurozone remains sluggish.
That said, debate about what happens next could be more heated than investors currently think, analysts at ING said in a note to clients. They added that "while there are plenty of reasons for the ECB to continue cutting rates", more hawkish policymakers will "no doubt find some arguments for putting their foot on the brakes".
GBP/USD slipped slightly to 1.3564, even as the pound largely retains its strength against the greenback as the Bank of England takes a cautious stance towards cutting interest rates amid elevated inflation.
Sterling is up over 8% versus the dollar so far this year.
Yen slips slightly
In Asia, USD/JPY traded 0.4% higher to 143.29, following weaker-than-expected wage income data for April. The reading raised questions over just how strong Japanese private consumption remained, which could cloud the outlook for growth in 2025.
USD/CNY traded largely unchanged at 7.1834, as traders await news of trade talks between Trump and Chinese President Xi Jinping, although Washington and Beijing have provided few cues on when the dialogue will take place.