Investing.com – The US dollar slipped lower on Tuesday, heading for a one-week low after a report that President-elect Donald Trump's tariffs could be less aggressive, while the euro gained ahead of headline inflation data.
At 04:25 ET (09:25 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was trading 0.3% lower at 107.775, after fell overnight to the weakest since December 30.
A dollar is still on his back
The dollar has been on the back foot since the Washington Post released a report on Monday saying the new Trump administration was exploring plans to limit tariffs to sectors deemed critical to national security or the US economy.
President-elect Donald Trump has denied the report in a post on his Social Truth platform, but the dollar has continued to struggle to make progress.
“The dollar's failure to recoup all of its intraday losses on Monday appears to reflect two factors: first, the market had been overwhelmingly in favor of the dollar after a three-month rally that was almost continuous; secondly, an idea that there is no smoke without fireand that the content of that report Washington Post felt sensible,” said analysts at ING, in a note.
Much of the US economic data due on Tuesday, including for December and November, ahead of Friday's release is closely scrutinized for further clarity on the health of the world's largest economy. -world.
“Investors are unlikely to actively consider selling the dollar ahead of Trump's inauguration on January 20 on speculation about softer tariffs – but we could see a bit more rebalancing in the FX position and some more dollar consolidation in the meantime,” said ING. .
Euro rises ahead of inflation data
In Europe, it rose 0.4% to 1.0431, climbing again after jumping to a one-week high on Monday.
Attention turns on Tuesday to the release of the latest inflation data out of the euro area – the last data on regional prices before the European Central Bank's next meeting on 30 January.
The number for December is expected to have increased by 2.4% in December each year, accelerating from 2.2% in November.
However, data released from Spain and Germany showed a faster-than-expected rise in inflation, while France surprised on the downside.
Investors are currently looking for the ECB to cut interest rates by around 100 basis points in the first half of 2025, and any signs that inflation is easing further would give the ECB an opportunity to loosen policy. spread more, with emphasis on the single currency.
trading 0.4% higher to 1.2569, after sharp gains overnight, despite data showing that British house prices fell unexpectedly last month for the first time since March.
The Halifax mortgage lender said it fell 0.2% in December after a 1.2% rise in November, and was 3.3% higher on the year – below the 4.2% expected.
Interest rates were unchanged last month after consumer prices rose above target, and are expected to proceed cautiously with further rate cuts this year.
Yuan is still weak
In Asia, it rose 0.1% to 7.3325, with China's currency still underperforming, hitting its weakest in 17 years on Monday.
While the currency regained some ground, it remained fragile, with the new US. restrictions against Chinese companies putting more pressure on the currency.
it slipped slightly to 157.56, after earlier hitting its highest in nearly six months.
