Forex Today: US Dollar stands victorious as trade tensions ease

What you need to take care of on Friday, May 2:

Optimism about a de-escalation in the global trade conflict helped the US Dollar (USD)  despite disappointing data releases. US President  Donald Trump reported undergoing trade talks with South Korea, Japan and India. He also claimed that there's a "very good" chance of clinching a deal with China, yet added that any pact with Beijing has to be in US terms.  At the same time, a Beijing-backed outlet said on Thursday that United States officials have contacted their Chinese counterparts for talks. Tensions between China and the US persist, but optimism led Thursday's price action.

Mexican President Claudia Sheinbaum hit the wires by saying she had a very positive conversation with United States (US) President Donald Trump, adding they will continue working on trade in the upcoming days. Also, Trump claimed that US Treasury Secretary Scott Bessent is negotiating with "200 nations," and "has no life," amid being involved in trade talks.

Wall Street extended its latest recovery in thin market conditions, and major indexes are about to trim tariffs-inspired losses.

The Bank of Japan (BoJ) announced its decision on monetary policy early on Wednesday, keeping the short-term interest rate target unchanged in the range of 0.40%- 0.50% as widely anticipated. BoJ Governor Kazuo Ueda offered a press conference afterwards, noting that uncertainty from trade policies heightened sharply on officials' decision. The central bank expects to keep raising rates if the economy and prices move as projected. Finally, he added they expect underlying inflation to cool down due to tariffs and slow global growth. The Japanese yen weakened with the news, with USD/JPY extending gains beyond 145.50.

US data was mixed: On the one hand, Initial Jobless Claims for the week ended April 26 rose by 241K, much worse than the 224K anticipated and the previous weekly figure of 223K. On the other hand, ISM published the April Manufacturing Purchasing Managers' Index (PMI), which edged lower to 48.7 from 49 in March, beating the market expectation of 48.

The US will release the Nonfarm Payrolls (NFP) report on Friday. The country is expected to have added 130K new job positions in April, while the Unemployment Rate is foreseen at 4.2%, unchanged from March. Employment-related data ahead of the NFP report, however, hints at a soft reading, which may end up weighing on the USD.

EUR/USD lost the 1.1300 level while GBP/USD settled at around 1.3260. Commodity-linked currencies also edged lower, despite the positive tone of Wall Street. The AUD/USD eased towards 0.6360, while USD/CAD trades in the 1.3850 region ahead of Friday's opening.