FX.co ★ Dollar Pares Most Gains, US-China Talks Awaited

The dollar index, which initially saw gains, adjusted to a neutral stance, hovering around the 99 mark on Tuesday as market participants closely monitored the ongoing trade discussions between the United States and China, now entering their second day. Although no significant breakthroughs emerged from the initial talks, there remains a sense of optimism among US officials regarding the progress of these negotiations. Commerce Secretary Howard Lutnick indicated that the discussions are proceeding positively and are likely to extend throughout Tuesday. Market attention is also focused on forthcoming economic indicators, specifically the Consumer Price Index (CPI) and Producer Price Index (PPI) reports, which are anticipated to provide insight into inflation dynamics and the broader ramifications of the ongoing trade conflict. The dollar continues to linger near its lowest point since April—levels not seen since 2022—amid escalating concerns about the economic implications of President Trump's trade and fiscal strategies, prompting a pivot away from US investments. On the day's trading, the dollar exhibited relative strength against the British pound, influenced by disappointing UK employment data, which heightened expectations for interest rate reductions by the Bank of England.