Dollar weakens

LONDON: The dollar fell as U.S. tariffs on Chinese imports took effect, but a muted reaction in currency markets suggested the escalation had largely been priced in by investors focusing on a U.S. jobs report due later in the day.

The latest salvo in a trade conflict between the world’s biggest economic powers were fired on Friday when U.S. tariffs on $34 billion worth of Chinese goods came into effect.

Markets were looking for any retaliatory measures China might employ - Beijing said on Friday it had no choice but to fight back on trade - and the volatility that could cause. The response among major currencies, however, was fairly limited. “The first batch of tariffs is a milestone in the trade war but a very well-telegraphed one. China said it’s forced to retaliate but did not specify a time-frame. That’s helping risk appetite,” said Elsa Lignos, global head of FX strategy, at RBC Capital Markets in London.

The dollar index against a basket of six major currencies slipped to 94.317 after slipping to 94.177, its lowest since June 26, the previous day. That helped the euro rise to $1.172, its strongest since June 26.

The euro was lifted on Thursday by strong German industrial orders and signs Washington had softened its trade rhetoric toward European Union automakers.