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Jul 25, 2018


Dollar softens as hope for US-EU trade deal rises


119609144MW001_TWENTY_DOLLA Mark Wilson | Getty Images
The U.S. dollar dipped against a basket of currencies on Wednesday after a meeting between President Donald Trump and European Commission President Jean-Claude Juncker.
U.S. President Donald Trump said he hoped "to work something out on a fair deal with Europe," during his meeting with Jean-Claude Juncker. The talks come after the United States imposed tariffs on European Union steel and aluminum, and Trump threatened to extend those measures to EU-made cars.
The dollar traded down 0.32 percent versus a basket of major currencies at 94.31. The euro was up 0.21 percent at $1.1708.
Lack of clarity over where a brewing U.S.-European trade conflict is heading kept most major currencies, including the dollar, range-bound on Wednesday as Juncker traveled to Washington.
The European Commission is preparing a list of $20 billion of U.S. goods to be hit with retaliatory tariffs, EU trade commissioner Cecilia Malmstrom said on Wednesday.
Currency investors have also been keeping an eye on the Federal Reserve after Trump reinforced his criticism last week of the central bank's policy on raising interest rates, saying it could hurt the U.S. economy. He also accused the EU and China of manipulating their currencies.
"Short-term traders had to take notice of Trump's comments, but other countries did not take the bait. The dollar is fairly stable. There is no currency war," Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York, said in a note.
Against the yen, the dollar was 0.4 percent weaker at 110.75 yen per dollar.
The yen found some support early this week on expectations the Bank of Japan might be a step closer to scaling back some of its aggressive monetary stimulus.
The offshore yuan strengthened 0.37 percent against the dollar to 6.7658 yuan as traders took profits after the Chinese currency hit its weakest level since June 2017 on Tuesday. The Canadian dollar reached a two-week high against its U.S. counterpart as yield spreads between the two countries narrowed.
The loonie was 0.76 percent higher at 1.3052 Canadian dollars to the greenback.
The Australian dollar gained after data on Wednesday showed inflation remained stubbornly low last quarter despite fairly robust economic growth. It traded 0.23 percent higher at $0.7436.

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