Investing.com – The U.S. dollar was trading near two-month lows against a currency basket on Wednesday, as expectations that the Federal Reserve could cut interest rates in the coming months in response to fallout from global trade tensions pressured the currency.
The versus a basket of six major currencies was flat at 96.698 03:14 AM ET (07:14 GMT), not far from the 96.459 level it hit on Monday, its lowest since April 12.
The greenback has been pressured lower by a sharp decline in long-term U.S. Treasury yields, which fell to near two-year lows on Friday after a soft U.S. jobs report raised expectations for an interest rate cut by the Fed.
Investor focus is now on the Fed’s next policy meeting on June 18-19 and what kind of signals the central bank could offer on the direction of monetary policy.
“The market has priced in a rate cut by the Fed to a significant degree,” said Shinichiro Kadota, senior strategist at Barclays in Tokyo.
“So the market is waiting for next week’s Fed meeting as a chance to see by how much and for how long it is ready to ease policy.”
Expectations for a central bank rate cut this year rose last week after a number of Fed officials, including Chairman Jerome Powell, hinted they were open to easing monetary policy.
The was steady at 1.1332, within striking distance of a three-month peak of 1.1348 scaled on Friday.
The single currency was little affected by U.S. President Donald Trump’s accusation that Europe was devaluing the euro, which has gained roughly 1.4% against the dollar so far in June.
“The Euro and other currencies are devalued against the dollar, putting the U.S. at a big disadvantage,” Trump tweeted on Tuesday without offering any evidence.
The dollar was slightly lower against the at 108.34. The greenback has pulled back from a five-month low of 107.810 plumbed a week ago when risk aversion in the broader markets heightened demand for the safe-haven yen.
–Reuters contributed to this report
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