Currency markets showed measured movements Tuesday, with the dollar holding steady near six-week lows as traders awaited outcomes from US-China trade negotiations in London. The talks, following a phone call between Presidents Trump and Xi Jinping, are addressing challenging issues including semiconductor export restrictions, rare earth minerals access, and student visa policies.
The dollar index remained virtually unchanged at 98.989, reflecting its significant 8.7% decline this year as investors seek alternatives amid trade uncertainty. Sterling dropped 0.4% to $1.3499 after UK wage growth came in below expectations at 5.2%, potentially influencing the Bank of England’s rate-cutting timeline. Markets now price in 48 basis points of cuts by year-end.
Looking ahead, investors are focusing on Wednesday’s US inflation data and next week’s central bank meetings, with both the Federal Reserve and Bank of Japan expected to maintain current rates despite evolving economic pressures from global trade tensions.