Forex – Dollar Falls as U.S.-China Trade Sentiment Turns Toxic Ahead of Talks


© Reuters.

Investing.com – The U.S. dollar fell against its rivals on Tuesday, pressured by a rise in safe-haven currencies as investors fretted over a possible escalation in U.S.-China trade tensions with talks just hours away.

The , which measures the greenback against a trade-weighted basket of six major currencies, fell by 0.20% to 97.19.

The latest round of trade talks, slated for around 5:00 PM ET (21:00 GMT), are fraught with uncertainty as new U.S. tariffs are set to begin just seven hours later, with China reportedly vowing to respond in-kind.

Fearing the return of tit-for-tat tariffs between the U.S. and China, traders piled into safe-haven currencies like and to keep the dollar in the red.

President Donald Trump earlier this week said he would raise tariffs on $200 billion of Chinese goods on Friday, after member of his trade team accused China of backtracking on promises.

Fueling the negative expectations ahead of the talks, CNBC reported that Vice Premier Liu He no longer holds the title of “special envoy” for President Xi Jinping, suggesting he is on a “tighter leash” that would limit his deal-making ability.

Lower-than-expected U.S. wholesale inflation also added to the dollar’s woes as it reaffirmed expectations that pace of inflation is unlikely to gather momentum, leaving the Federal Reserve to remain on pause for the immediate future.

The Labor Department said Tuesday its for final demand increased 0.1% last month, below economists’ forecasts. Through the 12 months that ended in April, the core PPI stayed the same as the month before at 2.4%.

rose 0.20% to 1.3032, but gains were limited amid expectations that Brexit talks between the ruling Conservative and opposition Labour parties are unlikely to result in any meaningful progress to break the deadlock.

rose 0.29% to $1.1224 and fell 0.01% to C$1.3475.

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