WASHINGTON (dpa-AFX) - The U.S. dollar slipped to a three-week low on Friday after the U.S. increased tariffs to 25% from 10% on about $200 billion worth of Chinese goods and threatened to impose tariffs on nearly all imports from China.
China vowed to retaliate by imposing sanctions on U.S. goods, raising fears the trade war between the world's two largest economies could significantly hurt global growth.
Though the White House said on Thursday afternoon that deal could still happen, talks ended today without the two sides reaching an agreement. However, U.S. Treasury Secretary Steven Mnuchin called the discussions 'constructive.'
The dollar index, which dropped to a low of 97.13, recovered to 97.32 later, limiting its loss to less than 0.1%.
With data showing U.S. consumer inflation improved less than forecast in April raising hopes the Fed would keep interest rate on hold for the foreseeable future, the dollar was under pressure this morning.
The Chinese currency yuan dropped to a fresh 4-month low against the greenback, falling to 6.8649. It later recovered to 6.8440 a dollar.
Against British Pound Sterling, the dollar recovered from a low of $1.3047 to $1.3008.
The euro gained more than 0.2% against the greenback, riding on strong exports data from Germany.
Canada's loonie gained about 0.5% against the U.S. dollar after data from Statistics Canada showed a drop in Canadian unemployment and a bigger than expected increase in job creation in the month of April.
After rising to a 3-month high on Thursday, the Yen weakened against the dollar, drifting down to 109.97 a dollar. It touched a low of 110.05.
The Swiss franc came off one-month high against the greenback and dropped to 1.3424, losing about 0.4%.
In U.S. economic news today, data from the Labor Department showed consumer prices in the U.S. increased by slightly less than anticipated in the month April, rising 0.3% after climbing by 0.4% in March. Economists had been expecting another 0.4% increase.
Compared to the same month a year ago, consumer prices in April were up by 2%, reflecting a modest acceleration from the 1.9% growth in March.
The annual rate of growth in core consumer prices also crept up to 2.1% in April from 2% in the previous month.
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