Dollar gains on trade war jitters before Fed

Dollar gains on trade war jitters before Fed

Dollar gains on trade war jitters before Fed

India's Sensex advanced 0.2 percent to 38,422.94.

The Bank of England is expected to leave its interest rate outlook unchanged at a policy meeting on Thursday due to the deep uncertainty over Britain's decision to leave the European Union.

The dollar though was feeling the strain, skulking near a two-week low on the bets that with both US and global growth now slowing the Fed will need to put any remaining rate hike plans firmly on ice.

That was partly due to its appeal as a safe-haven asset, analysts said, pointing to a Bloomberg report published late on Tuesday that said some US officials expressed concern that China was pushing back against USA demands in trade talks.

Asian shares are mixed in muted trading as investors await the U.S. Federal Reserve meeting later in the week. Hong Kong's Hang Seng gained 0.1 percent to 29,418.12, while the Shanghai Composite dipped 0.2 percent to 3,090.98.

In Asia, Japan's benchmark Nikkei 225 lost almost 0.1 percent to 21,566.85.

"Around 30 percent of market participants are expecting a rate cut this year", said Kumiko Ishikawa, senior analyst at Sony Financial Holdings.

But economists warn that is unlikely: with unemployment falling and eventually pushing wages higher, inflation might rear its head as soon as the summer, compelling the Fed to act.

The dollar index against a basket of six major currencies eased 0.1 per cent to 96.450, hovering close to a two-week low.

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The Australian dollar, which has advanced in recent days - helped by the US dollar's weakness - was down 0.22 percent after minutes of the Reserve Bank of Australia's March policy meeting expressed concern about the housing market.

The Dow Jones Industrial Average fell 26.72 points, or 0.1 percent, to 25,887.38, the S&P 500 lost 0.37 points, or 0.01 percent, to 2,832.57 and the Nasdaq Composite added 9.47 points, or 0.12 percent, to 7,723.95.

Expectations of a dovish Fed have dented the USA dollar, which has already been under pressure this year after Powell all but signalled a pause to the tightening cycle at the previous meeting.

It was not helped by 6-per cent fall in China's iron ore prices on expectation of higher supply as Vale SA is set to resume work at its largest iron ore mine in Minas Gerais state.

Palladium last rose 0.76 percent to $1,595.50 an ounce.

World shares basked in their longest winning streak of the year ahead of a Federal Reserve meeting on Tuesday, while the pound kept calm after another dramatic twist in the Brexit plot bolstered bets on a lengthy delay to the process.

In the currency market, the pound found firmer footing on Tuesday after slipping to as low as $1.3183 overnight as lawmakers cast doubt on Prime Minister Theresa May's third attempt to get parliament to back her Brexit deal.

On the other hand, the EU's chief negotiator, Michel Barnier, has said an extension would only make sense if it increased the chances of May's deal being ratified by Britain's House of Commons. USA sanctions against oil producers Iran and Venezuela are also boosting prices, although traders said the market may be capped by rising US output.

US West Texas Intermediate (WTI) futures stood flat at US$59.02 per barrel after touching their highest since November at US$59.57 on Tuesday.

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