FOREX-Dollar falls broadly ahead of US data, tariff uncertainty

By Gertrude Chavez-Dreyfuss and Amanda Cooper

NEW YORK/LONDON, April 28 (Reuters) - The U.S. dollar slid across the board on Monday, as investors waited warily for further news of U.S. trade policy and braced for a week packed with economic data, which may initially provide an indication on whether U.S. President Donald Trump's trade war is hitting home.

"Today has been characterized by a correlation between the dwindling buck and doubt affecting equities," said Juan Perez, director of trading at Monex USA in Washington.

"While earnings will keep markets eager, the main issue remains the lack of faith in having a good economic situation developing in the U.S. as it tries to act unilaterally and use leverage as the world's largest economy."

Both the S&P 500 .SPX and Nasdaq .IXIC fell on Monday, with the Dow .DJI edging higher.

In afternoon trading, the dollar fell 1.1% against the yen to 142.10, posting its biggest daily fall since April 10. The euro also rose versus the greenback, up 0.5% at $1.1419 EUR=EBS.

Against the Swiss franc, the dollar was down 0.7% at 0.8205 franc CHF=EBS. Earlier in the session, the dollar had posted gains versus the Swiss currency.

The U.S. unit was headed for its largest monthly fall since July last year, as Trump rattled confidence in the dependability of U.S. assets.

The euro, on the other hand, was on track for its largest monthly gain against the dollar in nearly 15 years. The greenback did trim monthly losses against both the euro and yen toward the end of last week amid an apparent conciliatory shift in the tone of U.S.-China relations.

Both sides seemed to soften their respective stances, with the Trump administration signalling openness to reducing tariffs and China exempting some imports from its 125% levies.

Yet where Trump insists there has been progress, and that he has spoken with President Xi Jinping, Beijing has denied trade talks are occurring and on Sunday, Treasury Secretary Scott Bessent did not say that tariff talks were under way.

On Monday, Bessent said top U.S. trading partners had made "very good" proposals to avert U.S. tariffs, and one of the first deals to be signed would likely be with India.

As for China, the top Treasury official said "all aspects of government are in contact with China," and underscored that it was up to China to reduce tensions since it sold five times more goods to the United States than vice versa.

BIG DATA COMING UP

Investors are also awaiting the April U.S. jobs report, due on Friday, where jobs growth is still expected, although at a sharply slower pace than a month earlier.

Federal Reserve officials including Chair Jerome Powell have indicated they would be willing to cut interest rates if it becomes clear there are risks to growth. But most appear content to first determine what impact Trump's tariffs have on real-economy metrics such as inflation and employment before making a move.

The U.S. also releases first-quarter GDP data and the Federal Reserve's favored inflation gauge, core PCE, this week, while GDP and preliminary inflation figures are also due in Europe.

"Data later on may move the buck but for now we see ourselves at the mercy of headlines offering some clue about progress on the trade front," said Monex's Perez.

"Long-term planning as well as forecasting navigating through the headache of ever-changing narratives. With 'Sell USA' mentality abroad, the dollar is quick to suffer from a sour mood.

Across the Atlantic, the euro fell 0.4% against the pound EURGBP=D3 to 85.03 pence, as news hit of a massive power outage across much of Spain on Monday.

Canadians, meanwhile, vote in a general election on Monday, with the ruling Liberal Party holding a narrow lead in opinion polls and a larger one in online prediction markets. Options markets suggest traders are not bracing for much currency volatility, with the U.S. dollar slipping 0.1% to C$1.3836 CAD=D3.

The Bank of Japan, on the other hand, sets monetary policy on Thursday.

No policy change is expected, though markets will be focused on the outlook and how policymakers are planning to navigate an uncertain economic environment- especially as U.S.-Japan trade talks are expected to touch on the currency.

Japan's top currency diplomat Atsushi Mimura on Monday denied a report in the Yomiuri newspaper that Bessent had said during a bilateral meeting with Japan that a weak dollar and a strong yen are desirable.