The US dollar dipped against a basket of currencies on Wednesday ahead of a meeting between President Donald Trump and European Commission President Jean-Claude Juncker, but investor caution about a trade rift between the two economic powers limited movement. Lack of clarity over where a brewing US-European trade conflict is heading kept most major currencies, including the dollar, range-bound on Wednesday as Juncker traveled to Washington for trade-focused talks with Trump, set for 1:45 p.m. ET (1745 GMT).
"Markets are kind of squaring up ahead of the meeting today," said David Gilmore, partner at FX Analytics in Westbrook, Connecticut. The talks come after the United States imposed tariffs on European Union steel and aluminum, and Trump threatened to extend those measures to EU-made cars.
The European Commission is preparing a list of $20 billion of US goods to be hit with retaliatory tariffs, EU trade commissioner Cecilia Malmstrom said on Wednesday. The move "suggests they're ready to go with plan B ... which is a barroom brawl," Gilmore said. The dollar traded down 0.12 percent versus a basket of major currencies at 94.495. The euro was up 0.1 percent at $1.1692.
Against the yen, the dollar was 0.13 percent weaker at 111.04 yen per dollar. The yen found some support early this week on expectations the Bank of Japan might be a step closer to scaling back some of its aggressive monetary stimulus.
The offshore yuan strengthened half a percent against the dollar to 6.772 yuan as traders took profits after the Chinese currency hit its weakest level since June 2017 on Tuesday. The Canadian dollar reached a two-week high against its US counterpart as yield spreads between the two countries narrowed. The loonie was 0.4 percent higher at 1.3094 Canadian dollars to the greenback.
The Australian dollar slumped after data on Wednesday showed inflation remained stubbornly low last quarter despite fairly robust economic growth. It traded 0.1 percent lower at $0.7413.
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