Today's Edition
SINGAPORE (REUTERS)
The US dollar firmed on Tuesday as Washington and Beijing remained locked in trade talks that left investors on edge and hesitant in placing major bets while looking ahead to the US inflation report later in the week.
Top officials from the world's two largest economies sought to defuse a dispute that has widened from tariffs to restrictions over rare earths, with trade talks extending to a second day in London.
The talks come after US President Donald Trump and his Chinese counterpart Xi Jinping spoke by phone last week and at a crucial time for both economies.
The euro eased 0.17% to $1.14 and sterling was at $1.3543. The dollar index, which measures the US currency against six key rivals, was 0.2% higher at 99.189, but remained near six-week lows it touched last week.
The index is down 8.7% this year as investors, worried about the impact of tariffs and trade tensions on the US economy and growth, flee US assets and look for alternatives.
Washington and Beijing are trying to revive a temporary truce struck in Geneva that had briefly lowered trade tensions and calmed markets.
The Australian dollar, often seen as a proxy for risk sentiment, was flat at $0.652, while the New Zealand dollar was a touch softer at $0.60425, but stayed close to the seven-month peak it hit last week.
The Japanese yen weakened after comments from Bank of Japan Governor, Kazuo Ueda, suggested the timing of the next interest rate hike could be pushed back. The BOJ is due to meet next week and is expected to stand pat on rates.
While risks to Japan's export-heavy economy from Trump's tariffs have pushed back market bets on the next rate-hike timing, investors are on the look-out for any clues from Ueda on how soon rate increases could resume.
The yen was last 0.2% weaker at 144.90 per dollar but has gained over 8% against the greenback this year on safe-haven flows during the market tumult unleashed by Trump's tariff chaos.
Investor focus this week will be on the consumer price index report for May, due on Wednesday. The report could give insight into the tariff impact at a time investors are wary of any flare-ups in inflation ahead of the Fed's policy meeting next week.
The US central bank is widely expected to hold rates steady, with Fed officials having signalled that they are in no rush to cut rates.
Traders are pricing in nearly two 25-basis point cuts by the end of the year.
