The euro was little changed versus the dollar on Tuesday as investors were wary of a looming deadline for U.S. tariffs on China, the British election and upcoming Federal Reserve and European Central Bank meetings.
The greenback was neutral against a basket of six other major currencies.
This is “reflecting limited anticipation for a change from both the Fed and ECB meetings this week as well as uncertainty about the Dec. 16 tariff deadline,” said ING analysts in a note to clients.
Front of mind is whether Washington will go ahead with a new round of tariffs on Sunday, or whether a deal with China can be reached before then.
White House economic adviser Larry Kudlow said on Friday that the Dec. 15 deadline is still in place, but Agriculture Secretary Sonny Perdue on Monday raised the possibility the tariffs are not imposed.
Against the euro, the dollar was last flat at $1.1072, and against the Japanese yen the greenback found support after last week’s declines, steadying at 108.62 yen. The dollar was also steady against a basket of currencies at 97.605.
The Chinese yuan — the most sensitive currency to the U.S. and China trade war — was also trading neutral against the U.S. dollar in the offshore market, last at 7.0370.
Soaring inflation in China, ahead even of lofty expectations, had little effect on a market waiting for trade news.
Traders will be watching the German ZEW survey due at 10:00 GMT. Economists polled by Reuters are expecting that the situation has improved a bit, with the economic sentiment expected at 0 and the current conditions expected at -22.3 for December, compared with -2.1 and -24.7 respectively in November.
Investors are almost certain the Fed will hold rates steady when its two-day meeting concludes on Wednesday, increasing investors’ focus on the outlook and on finding a trade-war truce.
The ECB is likewise expected to keep interest rates steady.
Elsewhere, the pound maintained its recent gains, last at $1.3140 and 84.26 pence against the euro, with market participants still viewing a Conservative Party majority win as the most likely outcome of the general election on Thursday.
Source : Reuters