FOREX-US dollar regains poise on easing trade worries, month-end buying

By Gertrude Chavez-Dreyfuss

NEW YORK, April 29 (Reuters) - The U.S. dollar advanced on Tuesday, lifted by the Trump administration's plan to ease the impact of auto duties on local car manufacturers as well as the prospect of more tariff deals with some trading partners.

The greenback also benefited from month-end buying, as investors sought to rebalance their portfolios after President Donald Trump's reciprocal tariff announcement led to massive selling in U.S. equities and bonds in April.

Trump on Tuesday though will soften the blow of his auto tariffs through an executive order mixing credits with relief from other levies on parts and materials, after automakers pressed their case with the administration.

At the same time, the dollar got a boost from comments by U.S. Treasury Secretary Scott Bessent on Tuesday who said the administration is making substantial progress on tariff negotiations, noting that deals are forthcoming for India and South Korea. He said he will speak to at least 17 trade partners over the next few weeks.

U.S. Commerce Secretary Howard Lutnick said on Tuesday the Trump administration has already reached one trade deal and is waiting for approvals from that country before announcing it.

In afternoon trading, the dollar rose 0.2% against the yen to 142.22 JPY=EBS, rising in four of the last six sessions. On the month, however, the dollar has lost more than 5% of its value against the Japanese currency, on track for its biggest monthly fall since July 2024.

"This is partly about tariff relief, like auto parts tariff being reduced. The dollar also has tended to do better recently when equities are higher so that may be part of it," said Vassili Serebriakov, FX strategist, at UBS in New York.

"But I wouldn't read too much into it. We're also close to month-end. It's possible that there may be some dollar-buying for rebalancing purposes.

The dollar also gained against the euro, which slid 0.2% to $1.1395 EUR=EBS. But Europe's shared currency showed steep gains for April of 5.3%, on pace for its largest monthly gain since November 2022.

WORRIED ABOUT MOUNTING US-CHINA TRADE WAR

Investors also fretted over a lack of progress in de-escalating the U.S.-China trade conflict.

Bessent said on Tuesday that over time, it will be evident to Beijing that Chinese tariffs are not sustainable for the world's second-largest economy, predicting that China could lose 10 million jobs quickly due to tariffs.

In a sign that China's hard stance on U.S. tariffs was easing, its government has waived the 125% tariff on ethane imports from the United States imposed earlier this month, two sources with knowledge of the matter said on Tuesday, among a group of products that have been granted exemptions.

Reuters reported last week that some pharmaceutical, aerospace and semiconductor products had also been granted tariff exemptions.

In other currency pairs, the dollar advanced 0.6% against the Swiss franc CHF=EBS to 0.8239. For the month of April, however, the U.S. unit has fallen nearly 7% versus the franc, its heftiest monthly decline since January 2015.

Aside from trade, investors are also focused on this week's deluge of U.S. data.

The latest U.S. jobs report will be a key driver for markets, along with preliminary first-quarter growth figures and core PCE data — the Fed's favoured inflation gauge.

Fawad Razaqzada, market analyst, at City Index and FOREX.com, in a research note said that with a slew of data coming out this week, traders are searching for "signs of momentum —or lack thereof— in the U.S. economy."

"The bigger question remains whether the Fed will feel compelled to adjust interest rates in the coming months," he added.

Tuesday's data, meanwhile, highlighted a gradually declining economy. U.S. job openings dropped sharply in March, but a decline in layoffs suggested that the labor market remained on solid footing despite an ever-shifting tariff policy casting a pall over the economy.

The Conference Board's U.S. consumer confidence index, on the other hand, sank to a nearly five-year low in April on tariff concerns.

In Canada, the loonie CAD= eased 0.1% to C$1.3843 per U.S. dollar, after Prime Minister Mark Carney's Liberals retained power in the election on Monday, but fell short of the majority government required to help him negotiate tariffs with Trump.