May 9 (Reuters) - The dollar index fell on Friday, paring a weekly gain as optimism about the U.S trade agreement with the U.K. faded before weekend talks with China. U.S. President Donald Trump said 80% tariffs on Chinese goods "seems right" and called on China to open its markets. White House Press Secretary Karoline Leavitt added later that the United States is not going to unilaterally reduce tariffs. China's central bank said it will spur financial institutions to expand support for consumption and foreign trade amid a protracted trade war with the United States. After Wednesday's policy meeting, a wave of Fed speakers reiterated that the current economic uncertainty calls for monetary policy patience. In data, Canada's unemployment rate rose to 6.9% in April, the highest since November, as U.S. tariffs started to hit the export sector.
EUR/USD's ability to hold above a nearby lower Bollinger at 1.1222 after a sharp dollar short squeeze offers hope for euro bulls. Hedging flows and the option bias favors the topside, though a catalyst is lacking. A close above the April 28 high of 1.1424 would be a confidence-booster for euro longs. EUR/CHF rose after Switzerland and the United States agreed to accelerate their trade talks. GBP/USD was orbiting its 21-day moving average at 1.3293, though an impending bearish crossover suggests momentum may start to build. A lower 21-day Bollinger at 1.3141 lends support below 1.32 while YTD high and upper Bollinger at 1.3444 is clear resistance. Bank of England Chief Economist Huw Pill said U.S. tariffs have not yet had a 'dramatic' effect on Britain's economy and the central bank should not neglect longer-term domestic pressures that might push up on inflation. More BOE speakers are slated for next week, including Governor Andrew Bailey.
USD/JPY pulled back toward the 145 pivot level due to a broadly weaker dollar before US-China talks. Barring a bullish USD surprise or soft Japanese data, the pair appears set to drift toward the middle of its recent range between 140 and 146. A close above a nearby upper Bollinger at 145.82 would be a bullish development.
Treasury yields were largely unchanged. The 2s-10s curve eased about 1 basis point to +49.8bp.
The S&P 500 rose 0.10% led by a jump in energy shares.
Oil gained 1.87% on hopes of future demand. Trump will visit Saudi Arabia next week.
Gold rose 0.93% as dollar eased while copper gained 0.95%. Heading toward the close: EUR/USD +0.2%, USD/JPY -0.39%, GBP/USD +0.49%, AUD/USD +0.14%, DXY -0.23%, EUR/JPY -0.19%, GBP/JPY +0.02%, AUD/JPY -0.27%.(Editing by Burton Frierson Reporting by Robert Fullem)
