Investing.com - The U.S. dollar rose towards a three-week high on Tuesday as hope dampened that the Federal Reserve will ease monetary policy aggressively, while worry over U.S.-China trade tensions hitting corporate profits contributed to an equity sell-off on Wall Street.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, rose 0.2% to 97.132 by 10:40 AM ET (14:40 GMT).
An upbeat jobs report on Friday helped the greenback, leading traders to revise their assumptions as to how much the central bank might cut rates.
The Fed opened the door at its last policy meeting for a cut and is expected to cut rates by 25 basis points when it meets at the end of July. Expectations for a 50-basis point cut, however, have fallen to 5% from 25% last week.
Fed Chairman Jerome Powell is due to appear before Congress on Wednesday and Thursday for his semiannual testimony, and is likely to be questioned about his willingness to ease policy.
The dollar was higher against the Japanese yen, with USD/JPY rising 0.1% to 108.83. The euro fell with EUR/USD down 0.1% to 1.1203 and USD/CAD gained 0.3% to 1.3127. AUD/USD slumped 0.7% to 0.6922, while USD/KRW rose 0.2% to 1,182.51.
Meanwhile GBP/USD hit a six-month low before rebounding a little to trade down 0.3% at $1.2496, after U.K. retail sales fell 1.6% from a year earlier in June, adding to indications that the British economy is contracting.
The looming risk of a Hard Brexit, meanwhile, remains a background threat to the pound, given that the two men vying to be Prime Minister have both indicated their willingness to risk that scenario. A final debate between Conservative Party leader candidates Boris Johnson and Jeremy Hunt is expected later Tuesday.
The Turkish lira stabilized after falling sharply on Monday in the wake of President Tayyip Erdogan's decision to dismiss the central bank governor. USD/TRY was down 0.4% to 5.7127, but is still up over 1.5% from Friday.