The dollar slipped against the safe-haven Japanese yen on Tuesday amid renewed trade-related worries and as an unexpected drop in US producer inflation supported the case for the Federal Reserve room to cut interest rates again later this month.
The Trump administration is moving ahead with discussions around possible restrictions on capital flows into China, with a focus on investments made by US government pension funds, Bloomberg reported on Tuesday, citing people familiar with the matter.
The discussions comes at a delicate time for US-China trade relations as top-level trade talks are scheduled to resume on Thursday and Friday, when Chinese Vice Premier Liu He meets with US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin in Washington.
"This obviously is not a good precursor before any type of negotiations. There is some trepidation in terms of market expectations (for a deal)," said Minh Trang, senior currency trader at Silicon Valley Bank in Santa Clara, California.
Against the yen, which tends to benefit during geopolitical or financial stress as Japan is the world's biggest creditor nation, the dollar fell 0.32% to 106.94 yen.
The dollar index, which measures the greenback against a basket of other currencies, was up 0.07% at 99.036.
Meanwhile, sterling touched a one-month low against the euro on as investors took fright at reports that Brexit talks between Britain and the European Union were close to breaking down. The pound was 0.69% lower against the greenback.
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