The U.S. dollar weakened against major currencies on Monday, retreating from gains spurred by a robust U.S. jobs report as markets turned cautious ahead of high-stakes U.S.-China trade negotiations set to begin later today in London.
The talks, critical for both economies, come amid China’s struggle with deflation and growing trade uncertainty weighing on U.S. business and consumer confidence, prompting investors to question the dollar’s safe-haven appeal.
The U.S. delegation, led by Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and Trade Representative Jamieson Greer, will face a Chinese team expected to include Vice Premier He Lifeng.
With both sides under pressure to stabilize economic relations, analysts remain skeptical about immediate breakthroughs. “A deal to keep talking might be better than nothing, but without concrete progress, market sentiment will likely stay subdued,” said Charu Chanana, chief investment strategist at Saxo Markets.
Friday’s U.S. employment report, which showed stronger-than-expected job growth, had briefly bolstered the dollar, halving its weekly losses in the dollar index. Despite this, the index, which tracks the dollar against six major currencies, fell 0.07% to 99.045 on Monday, reflecting a year-to-date decline of over 8.6%. Yields on U.S. Treasuries also eased slightly after a sharp rise post-jobs data.
Global currencies saw modest gains against the dollar. The Japanese yen strengthened 0.31% to 144.425, supported by data showing Japan’s economy shrank less than anticipated in Q1 2025, alongside comments from Prime Minister Shigeru Ishiba on interest rate impacts.
The euro rose 0.18% to $1.1417, buoyed by the European Central Bank’s hawkish policy stance, while the British pound climbed 0.27% to $1.3555. The Swiss franc edged up 0.17% to 0.8209.
China’s offshore yuan held steady at 7.187 per dollar, despite troubling economic signals. May data revealed export growth slowed to a three-month low, and factory-gate deflation hit its deepest level in two years, underscoring the urgency of the London talks.
Elsewhere, Japan’s trade negotiator Ryosei Akazawa announced plans for a sixth round of discussions in Washington, signaling ongoing global trade maneuvering.
Investors are now bracing for a key U.S. inflation report for May, due later this week, which will shed light on the economic fallout from President Trump’s 10% universal tariff on non-USMCA imports. “May is the first month where the tariff’s impact is expected to surface.
The Fed will need several months of data to assess its persistence,” noted ANZ Bank analysts. With Federal Reserve officials in a blackout period before next week’s policy meeting, markets expect a cautious approach, with interest rate futures pointing to a possible 25-basis-point cut as early as October, per LSEG data.
As trade tensions and inflation concerns dominate, the dollar’s trajectory remains tied to the outcome of today’s talks and incoming economic data, with global markets on edge for signs of stability or further disruption.
WHAT YOU SHOULD KNOW
The U.S. dollar weakened against major currencies on June 9, 2025, as markets shifted from optimism over a strong U.S. jobs report to caution ahead of critical U.S.-China trade talks in London. With China facing deflation and U.S. businesses and consumers grappling with trade uncertainty, the outcome of the negotiations is important.
Without a concrete breakthrough in these negotiations, market sentiment is likely to remain subdued, and the dollar’s safe-haven status may continue to be questioned, especially as investors await a crucial U.S. inflation report to gauge the impact of recent tariffs.
