The U.S. dollar was weak against most major currencies on Tuesday ahead of the deadline for additional U.S. tariffs on Chinese imports and on continued uncertainty about a ‘phase one’ trade deal between the U.S. and China.
Traders also look ahead to the meeting of the Federal Reserve. The Fed is widely expected to hold rates on Wednesday. The bank’s accompanying statement is awaited for clues on future rate stance and the outlook for the economy.
The dollar index drifted down to 97.40 and was last seen at 97.44, down 0.21% from previous close.
Against the Euro, the dollar weakened to 1.1096, from $1.1067.
Survey data from the ZEW – Leibniz Centre for European Economic Research in Mannheim showed that Germany’s economic sentiment strengthened notably to the highest level in 22 months in December as strong exports and labor market conditions boosted expectations among financial experts.
The ZEW Indicator of Economic Sentiment rose to 10.7 in December from -2.1 in November. This was the highest reading since February 2018, when the score was 17.8. The score was also well above the forecast of 3.5 points.
The dollar declined to an over 8-month low against Pound Sterling. Around late afternoon, it was down more than 0.3% against Sterling, with a unit of Sterling fetching $1.3183, compared to $1.3143 late Monday.
The U.K economy stagnated in October as growth in industrial and service sectors were offset by contraction in construction, data from the Office for National Statistics revealed.
Gross domestic product remained unchanged in October from September, when it was down 0.1%.
Against the Japanese Yen, the dollar gained 0.18% at 108.76 yen, rising from 108.56.
The Swiss franc was up notably with the dollar-franc pair trading at 0.9842.
Against the loonie, the dollar was down marginally at 1.3232, while against the Aussie, it was up 0.13%, at 0.6814.
In trade news, House Democrats announced an agreement on President Donald Trump’s trade deal with Canada and Mexico.
The deal will allow the United States-Mexico-Canada Agreement, or the USMCA, Trump’s replacement for the North American Free Trade Agreement, or NAFTA, to move forward in the House.
House Speaker Nancy Pelosi, D-Calif., called the new agreement “much better than NAFTA” and argued changes negotiated by Democrats make the deal “infinitely better than what was initially proposed by the administration.”
On U.S.-China trade front, a report from the Wall Street Journal said the U.S. plans to delay imposing additional tariffs on Chinese goods.
Citing officials on both sides, the Journal said negotiators are laying the groundwork for delaying the tariffs set to kick in on December 15th as they continue to haggle over getting China to commit to massive purchases of U.S. farm products.
An earlier report from the South China Morning Post (SCMP) said a trade deal between the U.S. and China is unlikely to be completed this week.
However, the SCMP said sources close to the talks do not expect the tariffs planned for December 15th to take effect, adding to a growing chorus on both sides who expect de-escalation this week.
The material has been provided by InstaForex Company – www.instaforex.com