The dollar edged lower against a basket of the other major currencies on Wednesday as caution seeped back into markets amid simmering concerns over a U.S. – China trade spat and mounting tensions over Syria.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.17% to 89.17 by 03:25 AM ET (07:25 GMT).
Chinese President Xi Jinping and U.S. President Donald Trump both made conciliatory remarks on trade on Tuesday, which investors hope could pave the way for negotiations to avert a full blown trade war between the world’s top two economies.
But investors remained on edge following a report saying that early talks had already broken down.
Adding to market unease, the U.S. and its Western allies are discussing a possible military strike on Syria in response to an alleged chemical attack over the weekend. Russia has urged the U.S. to refrain from taking military action, amid rising tensions between the two powers.
Investors were looking ahead to U.S. inflation data and the minutes of the Federal Reserve’s latest meeting later in the day.
The dollar was lower against the yen, with USD/JPY down 0.15% to 107.03. The safe haven yen is often sought out by investors in time of market turmoil and political tensions.
The euro was at two week highs, with EUR/USD rising 0.23% to 1.2383.
The single currency remained supported 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 rising 0.29% to 1.4215.
Demand for sterling continued to be underpinned after Bank of England monetary policy committee member Ian McCafferty said on Tuesday that UK interest rates should be raised again without delay.
The risk sensitive Australian dollar was lower, with AUD/USD slipping 0.18% to 0.7747, while the New Zealand dollar was little changed, with NZD/USD last at 0.7359.
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