The U.S. dollar fell on Friday as trade tariffs between the U.S. and China began while the pound gained steam.
Trade conflict between the two biggest economies in the world began in force on Friday, when U.S. tariffs on $34 billion worth of Chinese goods went into effect. An additional tariff on another $16 billion expected to go into effect in two weeks. Meanwhile U.S. President Donald Trump has given instructions to identify a further $300 billion in possible Chinese goods.
China has also retaliated with tariffs on $34 billion of American goods, according to Xinhua news. Beijing had previously said it would impose tariffs on U.S. agricultural products, crude imports, and vehicle products.
The dollar was lower against the safe-haven yen, with USDJPY decreasing 0.18% to 110.45. In times of uncertainty, investors tend to invest in the Japanese yen, which is considered a safe asset during periods of risk aversion.
On the data front, the U.S. added more jobs than expected in June, indicating a strengthening economy. However, wage inflation rose less than expected, which could lower expectations for an interest rate increase. The increase in wages is being closely monitored by the Federal Reserve for evidence of diminishing slack in the labor market and upward pressure on inflation.
Elsewhere, the pound was also higher, with GBPUSD rising 0.40% to 1.3276 as Prime Minister Theresa May’s cabinet began its one-day summit on Brexit in a last minute ever to unite her government on its plans for leaving the European Union.
The euro gained ground, boosted by strong German industrial orders on Thursday and reports that the U.S. could soften its trade tariffs on European Union automakers. EURUSD rose 0.55% to 1.1753.
Meanwhile, the Australian dollar was higher, with AUDUSD up 0.54% at 0.7428, while NZDUSD rose 0.74% to 0.6834. The loonie was higher against the greenback, with USDCAD down 0.30% to 1.3091.