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The U.S. dollar index was flat on Tuesday as investors focused on the U.S.-China trade war and economic data for signals of growth and whether the U.S. Federal Reserve is likely to cut rates in the coming months.
Risk sentiment improved on Monday, after the United States reached a deal with Mexico on Friday to avoid imposing tariffs on the country.
Ongoing tensions between the U.S. and China and the prospect that U.S. President Trump will look to impose tariffs on Japan and Europe, however, continues to weigh on risk sentiment.
Investors are concerned that trade wars are harming global growth, and increasing the likelihood that the U.S. central bank will need to cut rates to stimulate growth.
Data on Tuesday showed that U.S. producer prices rose for a second straight month in May, though price pressures remained tepid.
“It certainly plays into the dovish Fed story,” said Win Thin global, head of currency strategy at Brown Brothers Harriman in New York.
Consumer Price Index data on Wednesday, which is closely watched by the Federal Reserve, is the next inflation indicator. Retail sales on Friday will also be closely watched for indication on whether tariffs are slowing the economy.
“We know we are in a low inflation environment right now, but the question is what is the U.S. story in terms of growth,” said Thin.
This month's G20 summit will help push U.S-China trade talks forward but no final agreement was expected to be reached there, U.S. Commerce Secretary Wilbur Ross said on Tuesday.
Trump on Monday said he was ready to impose another round of punitive tariffs on Chinese imports if he cannot make progress in trade talks.
Trump on Tuesday accused Europe of devaluing the euro zone's single currency in a series of tweets that also targeted U.S. monetary policy with renewed attacks on the U.S. central bank.
"The Euro and other currencies are devalued against the dollar, putting the U.S. at a big disadvantage," Trump tweeted without offering any evidence. He also slammed U.S. interest rates for being too high.
Interest rate futures traders are pricing in an almost 80 percent chance of a rate decrease at the Fed's July meeting, according to the CME Group's FedWatch Tool.
======================================================== Currency bid prices at 9:38AM (1338 GMT)Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar EUR= $1.1317 $1.1312 +0.04% -1.33% +1.1331 +1.1303 Dollar/Yen JPY= 108.6400 108.4300 +0.19% -1.47% +108.7900 +108.3600 Euro/Yen EURJPY= 122.96 122.66 +0.24% -2.58% +123.1400 +122.6300 Dollar/Swiss CHF= 0.9922 0.9896 +0.26% +1.10% +0.9935 +0.9893 Sterling/Dollar GBP= 1.2706 1.2683 +0.18% -0.40% +1.2727 +1.2671 Dollar/Canadian CAD= 1.3259 1.3265 -0.05% -2.77% +1.3277 +1.3250 Australian/Doll AUD= 0.6960 0.6961 -0.01% -1.26% +0.6966 +0.6948 arEuro/Swiss EURCHF= 1.1229 1.1196 +0.29% -0.22% +1.1235 +1.1192 Euro/Sterling EURGBP= 0.8905 0.8916 -0.12% -0.88% +0.8932 +0.8893 NZ NZD= 0.6583 0.6607 -0.36% -1.99% +0.6611 +0.6570 Dollar/DollarDollar/Norway NOK= 8.6277 8.6552 -0.32% -0.13% +8.6852 +8.6199 Euro/Norway EURNOK= 9.7634 9.7938 -0.31% -1.44% +9.8311 +9.7576 Dollar/Sweden SEK= 9.4411 9.4169 +0.29% +5.32% +9.4516 +9.4064 Euro/Sweden EURSEK= 10.6840 10.6530 +0.29% +4.09% +10.6896 +10.6502 (([email protected]; +1 646 223 6274; ReutersMessaging: [email protected]))
