The dollar slid to a 1-week low as traders awaited for fresh indications on whether there will be a deal between the U.S. and China.
The trade has roiled financial markets and dragged the global growth.
The U.S. dollar index edged down 0.11% to 97.77 by 07:23GMT, its lowest level since Nov.7
According to the Chinese state media Xinhua, the two sides had constructive talks but did not give details of the timing of a possible trade deal.
“It all sounds promising, but China has made rolling back some of the tariffs a precondition for the agreement, and it’s not clear whether Trump will agree to that…so net-net, it’s still up in the air,” said Marshall Gittler, Chief Strategist at F.X. analysis firm ACLS Global.
The dollar rose 0.17% to 108.91 against the safe-haven yen. The euro was slightly higher at 1.1062.
The bonds and dollar are likely to be sensitive to the Fed Reserve’s last policy minutes meeting due on Wednesday.
“The minutes are likely to reiterate that the U.S. economy is ‘solid’ and that current monetary policy settings are ‘appropriate,’ which would support the dollar,” said Joseph Capurso.
Capurso is a currency analyst at Commonwealth Bank of Australia.
But, Capurso noted the soft report on October U.S. retail sales released on Friday suggested a previously strong consumption was showing some weaknesses.
“Any further weakness in consumption could warrant a material reassessment of the outlook by the F.O.M.C. Under our baseline, the F.O.M.C. would most likely start cutting interest rates again in 2020,” said Capurso.
The upcoming Brexit deal vote and Lagarde’s speech support the dollar
Forex traders are awaiting the first major speech by the E.C.B. President- Christine Lagarde due on Friday for clues about future policy.
The GBP rose 0.4% to a two-week high of 1.2946 after Boris Johnson said all Conservative Party candidates at the Dec 12 election had pledged to back the Brexit deal.
Fresh opinion polls pointing towards a Conservative Party victory supported the pound.