The dollar was lower against a currency basket on Wednesday as investors awaited the conclusion of the Federal Reserve’s meeting later in the day, when it was expected to announce its first rate hike of the year.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was down 0.28% at 89.75 by 04:25 AM ET (08:25 AM GMT).
With the first rate hike of 2018 almost fully priced in market participants will be looking for signs that the Fed may tighten monetary policy at a faster pace later this year to prevent the economy from overheating.
Investors remained cautious as the threat of a U.S. – led trade war loomed over markets.
U.S. President Donald Trump was expected to unveil up to $60 billion in new tariffs on Chinese imports on Friday. The Trump administration already imposed tariffs on U.S. steel and aluminum imports earlier this month.
Investors are concerned that major U.S. trade partners could retaliate with similar measures and threaten the outlook for global growth.
The euro was higher against the dollar, with EUR/USD rising 0.33% to 1.2281.
Sterling was also higher, with GBP/USD rising 0.23% to 1.4029 ahead of the latest UK employment report later in the day.
The dollar was lower against the yen, with USD/JPY sliding 0.21% to 106.31.
The Australian dollar remained under pressure after falling to three-month lows overnight amid concerns that China may be hit by U.S. sanctions. China is a major destination for Australian exports.
AUD/USD was last at 0.7694 after falling as low as 0.7677 overnight.
The trade-related New Zealand and Canadian dollars were also near multi-month lows, with NZD/USD last at 0.7171 and USD/CAD most recently at 1.3041.
