The U.S. dollar was on the defensive at the beginning of Wednesday as Federal Reserve Chair Jerome Powell reinforced bets on a reduction of interest rates this month.
The greenback had fallen behind the safe-haven yen and the Swiss franc on Tuesday, as volleys were exchanged between Washington and Beijing in a tariff war that was beginning to simmer.
The euro had also appreciated against the dollar following the suggestions by the French government to freeze landmark pension reforms.
The dollar index that pegs the U.S currency against the three aforementioned peers with the three others stood at a flat position of 99.055 at 0011 GMT, having fallen 0.2 percent in the previous session.
The greenback stood firm at 151.80 yen, after a precipitate decline of 0.3 percent on Tuesday, and changed a little at 0.8013 franc, which had overnight fallen by 0.3 percent.
The euro stood at $1.1606 following an increase of 0.3 percent on the last session.
Powell hinted at the possibility of lowering rates at the Fed policy meeting on October 28-29 by stating that the labor market is still in its low-hiring, low-firing doldrums, and the fact that the government shutdown has not affected the availability of official economic data has not stopped those in charge of policy making from being able to evaluate the economic future at least temporarily.
LSEG data indicated that the markets are now priced to a quarter-point reduction this month and another in December, with three more to come in the following year.
On the international stage, the U.S. and China further intensified a battle of tit-for-tat trade fees on shipping companies that transport all goods, including holiday toys and crude oil.
President Donald Trump stated that Washington is looking into ending certain trading relationships with Beijing, including cooking oil.
Head of foreign exchange at Commonwealth Bank of Australia, Joseph Capurso, said, “We consider the U.S.-China tensions have room to escalate even further.” He specifically warned of the risks at the downside of the risk-sensitive Australian dollar.
He further stated that “President Trump could retaliate at any time.”
The Aussie has improved by 0.1 percent to reach $0.6491, a day following a decline of 0.5 percent on the previous day, when it hit a low of 0.64405 on August 22.
The New Zealand dollar weakened by 0.1 percent to $0.5706, building on a 0.2 percent fall on Tuesday when it plunged to a six-month low of $0.56839.
