Forex – Dollar Dips in Thin Trade Ahead of U.S. Holiday

Investing.com – The dollar dipped against a currency basket on Wednesday in thin trade ahead of the U.S. Independence Day holiday as concerns over heightened trade tensions remained to the forefront.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was down 0.11% to 94.23 by 03:21 AM ET (07:21 AM GMT).

Investors remained cautious ahead of Friday’s deadline for the U.S. to impose a 25% tariff on Chinese imports, which Beijing has vowed to match with a levy on U.S. products.

The yuan rebounded overnight after China’s central bank pledged to keep the exchange rate “basically stable,” in a bid to calm markets which have been roiled by fears over the fallout of the escalating trade spat between Washington and Beijing.

U.S. President Donald Trump is sticking to plans to penalize major trading partners, including the European Union, Mexico and Canada as part of his ‘America First’ policy that many investors fear will hit global growth.

The euro was treading water, with EUR/USD last at 1.1665, little changed for the day.

The dollar drifted lower against the yen, with USD/JPY sliding 0.16% to 110.39.

The pound edged higher, with GBP/USD up 0.11% to 1.3209 ahead of the latest UK service sector data which is expected to show steady growth.

The trade sensitive Australian and New Zealand dollars were a touch higher, with AUD/USD climbing 0.19% to 0.7400 and NZD/USD adding on 0.24% to trade at 0.6773.

The Aussie was boosted overnight after data showing that retail sales rose by a stronger than expected 0.4% in May, beating forecasts for the second straight month.