The dollar’s recent uptrend has been supported by generally upbeat U.S. economic data that has kept the Federal Reserve on track to raise interest rates at least two more times this year.
In contrast, other major central banks such as the Bank of Japan are not in a tightening mode.
In late trading, the dollar index was down 0.1 percent at 93.605 .DXY, after hitting a five-month high on Monday. The index, which tracks the dollar against a basket of currencies, was on pace for its largest daily loss in two weeks.
· U.S. Treasury yields pulled back from last week’s seven-year highs though, but still traded above 3 percent on Tuesday.
· Investors are now looking to the release on Wednesday of the Fed’s minutes from its most recent meeting and analysts said there could be inflationary overtones.
· James Chen, head of research at Forex.com in Bedminster, New Jersey, said a key level to watch on the dollar index amid the Fed’s minutes is the 94.00 resistance level.
“Any hawkish interpretation of the minutes could prompt a breakout above that level, which could then open the way towards the 95.00 handle and above,” Chen said.
“To the downside, any dovish interpretation could prompt a pullback towards the 92.50 support area once again,” he added.
· In other currency pairs, the euro dipped 0.1 percent against the dollar to $1.1778 EUR= amid political uncertainty in Italy. The country's anti-establishment 5-Star Movement and the far-right League on Monday proposed Giuseppe Conte as prime minister to lead their coalition government.
· The dollar, meanwhile, slipped 0.1 percent against the yen to 111 yen JPY=, after touching a four-month peak on Monday.
· U.S. President Donald Trump on Tuesday floated a plan to fine ZTE Corp (000063.SZ) (0763.HK) and shake up its management as his administration considered rolling back more severe penalties that have crippled the Chinese telecommunications company.
Trump’s proposal ran into immediate resistance in Congress, where Republicans and Democrats accused the president of bending to pressure from Beijing to ease up on a company that has admitted to violating sanctions on Iran.
Their reaction could complicate Trump’s efforts to win concessions from China that would narrow a $335 billion annual trade gap.
· European Union proposals to open its markets wider to U.S. products, including cars, appear not to have persuaded Washington to lift the threat of import tariffs on EU steel and aluminium, the bloc’s trade chief said on Tuesday.
· Democratic U.S. Senator Heidi Heitkamp, who backed a bank rule rewrite set to be passed by Congress, told Reuters on Tuesday she has not committed support for further rule-easing sought by Republican lawmakers.
· U.S. President Donald Trump said on Tuesday he will propose new tax cuts sometime prior to November, when Republicans look to hold on to their majorities in Congress in midterm elections.
· U.S. President Donald Trump said on Tuesday there was a “substantial chance” his summit with North Korean leader Kim Jong Un will not take place as planned on June 12 amid concerns that Kim is resistant to giving up his nuclear weapons
· High-level talks between North and South Korea will likely resume after May 25, once joint U.S.-South Korea joint military drills are completed, a South Korean government spokesman said on Tuesday.
Yoon Young-chan, a spokesman for the South Korean presidency, was speaking to reporters in Washington following a White House meeting between U.S. President Donald Trump and South Korean President Moon Jae-in.
· President Nicolas Maduro on Tuesday ordered the expulsion of two top U.S. diplomats in Caracas in retaliation for a new round of sanctions over Venezuela’s widely-condemned election, accusing them of a ‘conspiracy’ that was denied by the State Department.
The United States, European Union and most major Latin American nations have all said Sunday’s vote did not meet democratic standards.
President Donald Trump responded on Monday with an executive order limiting Venezuela’s ability to sell state assets.
· Congress on Tuesday rolled back some of the restraints imposed on banks after the 2007-2009 global financial crisis, but big players like Goldman Sachs Group Inc (GS.N), Morgan Stanley (MS.N) and JPMorgan Chase & Co (JPM.N), will not be breaking out the champagne.
While Wall Street banks lobbied hard for a range of provisions that would have weakened the 2010 Dodd-Frank reform law and boosted their profits, they got trumped by their smaller rivals, according to lobbyists, Congressional staff, bankers and disclosure records.
For example, the bill reduces federal oversight of banks between $50 billion and $250 billion in assets, and eases lending, capital and trading rules for smaller lenders, but big bank lobbyists and analysts agree it does little to help the nation’s largest lenders.
· Households are feeling more stable, small businesses are making money and many expect to expand and hire in the coming year, signs of continued optimism in two key parts of the economy, the Federal Reserve reported Tuesday in a pair of annual surveys.
· Brent crude prices settled slightly higher on Tuesday after a volatile session in which potential supply concerns surrounding Venezuela and Iran jockeyed with comments from President Donald Trump, who said he was not pleased with U.S.-China trade talks.
Brent LCOc1 futures rose 35 cents to settle at $79.57 a barrel, a 0.44 percent gain. Last week, the global benchmark topped $80 for the first time since November 2014.
U.S. West Texas Intermediate (WTI) crude CLc1 futures fell 11 cents to settle at $72.13 a barrel, a 0.15 percent loss. They earlier touched $72.83 a barrel, the highest since November 2014.
· OPEC may decide to raise oil output as soon as June due to worries over Iranian and Venezuelan supply and after Washington raised concerns the oil rally was going too far, OPEC and oil industry sources familiar with the discussions told Reuters.
Reference: Reuters
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