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·       The dollar struggled for traction against its peers on Tuesday, with investors increasingly convinced the Federal Reserve will not raise interest rates this year amid risks of a sharper slowdown in global growth.

The greenback was marginally firmer against the yen, after falling 0.2 percent earlier in the session as traders wagered that the monetary tightening cycle in the world’s largest economy has been halted for the year.

The dollar index was marginally higher, fetching 95.80 at 0244 GMT. Earlier in the session, it had hit an intra-day low of 95.68.

“The Fed is listening to the market and has acknowledged flashing market signs,” said Sim Moh Siong, currency strategist at Bank of Singapore.

“U.S. inflation has been well behaved so far and so the Fed does have room to pause on its rate hike cycle,” added Sim.

·       Analysts at Rabobank point out that the implied probability of a Fed rate hike in March is now zero; in May it is 2%; in June 6.9%; and by end-2019 it is just 5%.

“By contrast, the implied odds of a Fed rate cut in March is 2.9%; of a cut by June is 2.7%; and by December is 27.9%. One month ago the implied odds of a rate hike in March was 87.4% and 94% by end-2019, and the odds of a rate cut were zero! This puts our very own Philip Marey’s call of the Fed going just the once more at most and then being on hold look bang on the money – and those big Wall Street talking heads I already mentioned are looking a whole lot smaller today.”

·       The Federal Reserve may only need to raise interest rates once in 2019, Atlanta Fed President Raphael Bostic said on Monday, focusing on business executives' nervousness about the economy and a global slowdown as factors that may hold the U.S. central bank back.

He added that the list of potential problems includes the current partial shutdown of the U.S. government, which has left hundreds of thousands of federal employees without a paycheck.

·       The euro was down 0.2 percent at $1.1448, after touching an intra-day high of $1.1485. The single currency has gained around 1.3 percent over the last three trading sessions as the outlook towards the greenback weakened.

The euro’s recent strength has surprised some analysts as growth and inflation remain weak in the eurozone, well below European Central Bank forecasts.

“Having consolidated in a 200-pip range for a large part of the past 2 months, the pair is prime for a breakout,” said Kathy Lien, managing director of currency strategy at BKX Asset Management in a note.

·       The British pound changed hands at $1.2787, relatively unchanged from its previous close. Traders expect sterling to remain volatile over the next few weeks due to Brexit woes.

Britain’s Prime Minister Theresa May must win a vote in parliament to get her Brexit deal approved or risk seeing Britain’s exit from the European Union descend into chaos. The vote is now due to take place the week beginning Jan. 14.

May’s chances of winning the vote look slim as the DUP, the small Northern Irish party that usually props up her government, is opposed to the deal.

·       News that top economic negotiator and Vice Premier Liu He was also attending the talks provided some extra support, after US President Donald Trump on Friday said he thought a deal could be done, a sentiment shared by his Commerce Secretary Wilbur Ross.

"While we don't expect a full resolution in trade tension between China and the US in the foreseeable future, small steps in progress are likely to be taken favourably by investors," said Tai Hui, chief market strategist for Asia-Pacific at JP Morgan Asset Management.

"The latest positive signals from the Trump administration of prospects of reaching some form of agreement and Vice Premier Liu He attending the negotiations should continue to cheer the market in the near term."

·       US officials held a second day of trade talks with Chinese counterparts in Beijing on Tuesday, overshadowed by an unannounced visit from North Korean leader Kim Jong Un.

Neither side has yet provided any details about the talks in Beijing.

The second day of trade negotiations coincided with an unannounced visit by North Korean leader Kim Jong Un for talks with Xi in Beijing, amid speculation of a second meeting between Kim and Trump.

Some analysts say that China — Pyongyang’s key diplomatic ally and main source of trade — could use Kim’s visit as a bargaining chip in the US trade talks.

But Bonnie Glaser, a senior adviser at the Center for Strategic and International Studies, said the timing of the North Korean leader’s arrival could be coincidental.

·       Aiming to bolster his case for a wall along the U.S. border with Mexico, President Donald Trump said on Monday he would make a prime-time televised address and visit the border this week as the government marked its 17th day of a partial shutdown.

Democrats, who now control the U.S. House of Representatives, have rejected Trump’s demand for $5.7 billion to help build a wall. Without a deal on that sticking point, talks to fund the government have stalled.

·       The leaders of Canada and the United States discussed U.S. tariffs on Canadian steel and aluminum on Monday but no talks on lifting the sanctions are planned, a Canadian source familiar with the matter said.

After the conversation between Prime Minister Justin Trudeau and U.S. President Donald Trump, Trudeau’s office released a statement saying the two men had “discussed next steps in addressing steel and aluminum tariffs.” It gave no details.

·       Ousted Nissan Motor Co Chairman Carlos Ghosn declared his innocence in his first public appearance since his arrest in November, telling a Tokyo court on Tuesday that he was wrongly accused of financial misconduct.

·       South Korea's LG Electronics said on Tuesday its fourth-quarter operating profit likely fell 80 percent from the same period a year earlier, far below analyst expectations.

The world's second-biggest television set maker behind compatriot Samsung Electronics estimated profit of 75.3 billion won ($67.03 million) for October-December last year. That would compare with the 387 billion won average of 11 analyst estimates in an I/B/E/S Refinitiv poll.

Analysts said earnings were likely weighed down by higher year-end bonuses and marketing expenses for new smartphones.

·       Oil prices were stable on Tuesday, supported by hopes that talks in Beijing between U.S. and Chinese officials might defuse trade disputes between the world’s biggest economies, while OPEC-led supply cuts also tightened markets.

International Brent crude futures LCOc1 were at $57.42 per barrel at 0742 GMT, up 9 cents, or 0.2 percent from their last close.

U.S. West Texas Intermediate (WTI) crude oil futures CLc1 were at $48.56 per barrel, up 4 cents, or 0.1 percent.

Reference: Reuters, CNBC, FX Street