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The U.S. dollar slipped across the board on Wednesday, as the markets focus shifted to trade talks between the U.S. and the European Union in Washington.
European Commission President Jean-Claude Juncker was scheduled to meet with U.S. President Donald Trump in Washington. Late Tuesday, Trump tweeted advocating for a full free trade pact between the U.S. and the EU.
The European Union is coming to Washington tomorrow to negotiate a deal on Trade. I have an idea for them. Both the U.S. and the E.U. drop all Tariffs, Barriers and Subsidies! That would finally be called Free Market and Fair Trade! Hope they do it, we are ready - but they won’t!
— Donald J. Trump (@realDonaldTrump) July 25, 2018
“The talks aim to avert a new round of tariffs on European car exports to the U.S.,” wrote RBC chief currency strategist Adam Cole. Germany is the largest European car exporter. “Ahead of the meeting [EU Trade Commissioner Cecilia] Malmstrom said they would be seeking to ‘de-escalate the present situation and prevent it from worsening.’”
But after Trump called the EU, along with China, a currency and interest rate manipulator last week, the talks present a fair amount of headline risk, analysts said.
The euro EURUSD, +0.0599% was modestly stronger on Wednesday, last buying $1.1692, up from $1.1685 late Tuesday.
The ICE U.S. Dollar Index DXY, -0.16% which measures the greenback against six rivals, slipped 0.1% to 94.502. The broader WSJ Dollar Index BUXX, -0.16% was 0.1% down at 88.20.
While the greenback weakened across the board, it maintained relatively tight ranges. Along with blasting the EU and China, he said that the stronger dollar made the U.S. less competitive on the global market.
The focus will remain on the EU later this week, with European Central Bank policy makers due to meet on Thursday. While the central bank isn’t expected to change its current path — tapering asset purchases into year-end but only raising interest rates well into 2019 — euro traders will be watching for updates on economic growth forecasts for the second half of the year.
Elsewhere on the trade front, Trump also tweeted at that China was targeting U.S. farmers. The president unveiled a $12 billion plan to aid farmers hurt by trade tariffs late Tuesday.
China’s yuan, along with most of emerging markets currencies, strengthened against the buck on Wednesday. One dollar last bought 6.7652 yuan, down 0.4%, in the more restrictive onshore market USDCNY, -0.5124% and 6.7744 yuan in the more freely traded offshore market USDCNH, -0.6034% down 0.5%.
Anneken Tappe is a markets reporter for MarketWatch. She is based in New York.
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