The dollar was broadly lower against a basket of the other major currencies on Tuesday as fears over a trade war between the U.S. and China cooled after Chinese President Xi Jinping promised to cut import tariffs.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.31% to 89.26 by 09:58 AM ET (13:58 GMT).
Concerns over trade friction eased after Xi said that China would lower import tariffs on vehicles, encourage imports and strengthen the protection of intellectual property.
Speaking at the Boao Forum for Asia overnight, Xi also said that a Cold War mentality, zero-sum thinking, and isolationism was out of place in today’s world and only peaceful development and cooperation could bring results.
The remarks helped soothe investor jitters over the ongoing tit-for-tat tariff dispute which investors had feared might escalate into a full blown trade war between the world’s top two economies.
The euro rose to two-week highs, with EUR/USD advancing 0.38% to 1.2365.
The single currency was boosted after European Central Bank policymaker Ewald Nowotny said Tuesday that it was time to “normalize” its monetary policy.
The pound was also higher, with GBP/USD up 0.34% to 1.4178.
Sterling strengthened after Bank of England monetary policy committee member Ian McCafferty said in an interview with Reuters that UK interest rates should be raised again without delay.
Against the yen, the dollar was higher, with USD/JPY rising 0.21% to 106.99.
The safe haven yen, which tends to be sought out by investors during times of political or economic uncertainty had gained in the previous two sessions.
Losses in the yen were held in check amid geopolitical concerns. Markets fear that U.S.-Russia relations could deteriorate amid heightened tensions in the wake of a suspected chemical weapons attack in Syria.
The risk sensitive Australian and New Zealand dollars were higher, with AUD/USDrising 0.64% to 0.7747 and NZD/USD advancing 0.73% to 0.7357.