The U.S. dollar declined against its most major counterparts in the European session on Monday, as China pulled out of trade talks with the U.S., escalating trade tensions between the world’s two largest economies.
China cancelled planned trade talks with the U.S. and also cancelled a planned visit to the U.S. by vice premier Liu He scheduled for this week, as a new round of U.S. tariffs on Chinese goods kicked in, triggering fears of a protracted trade dispute between the world’s two largest economies.
Investors awaited the Federal Reserve’s two-day monetary policy meeting ending on Wednesday, with economists expecting the central bank to raise interest rates by another quarter point.
The accompanying statement is likely to attract considerable attention along with Fed Chairman Jerome Powell’s press conference as traders attempt to gauge the outlook for further rate hikes.
The day’s economic calendar is quiet, with Dallas Fed Manufacturing Business Index due shortly.
The currency held steady against its major counterparts in the Asian session, with the exception of the yen.
The greenback fell to 1.3161 against the pound, from a high of 1.3063 seen at 2:30 am ET. Next key support for the greenback is likely seen around the 1.34 level.
The Industrial Trends Survey from the Confederation of British Industry showed that UK manufacturing orders deteriorated in September as export order books faded a little.
The total order book balance fell to -1 percent in three months to September, in contrast to the forecast of +4 percent. The export order book balance stood at +5 percent.
Having advanced to a 4-day high of 1.1724 against the euro at 2:30 am ET, the greenback reversed direction and dropped to 1.1775. The next possible support for the greenback is seen around the 1.19 area.
Survey data from Mannheim-based Ifo institute showed that Germany’s business confidence weakened slightly in September.
The business sentiment index fell to 103.7 in September from 103.9 in August. Economists had forecast the score to drop to 103.2 from the originally estimated 103.8 in August.
The greenback retreated to 0.9584 against the franc, from a high of 0.9606 seen at 2:15 am ET. The greenback is poised to challenge support around the 0.94 mark.
The greenback eased to 0.7279 against the aussie, from a 5-day high of 0.7253 touched at 2:15 am ET. The greenback is likely to find support around the 0.745 region.
On the flip side, the greenback advanced to 112.71 against the yen and held steady thereafter. This may be compared to a 4-day low of 112.40 hit at 5:00 pm ET. At last week’s close, the pair was worth 112.55.