Peter Nurse

Investing.com: The dollar edged up Tuesday ahead of release of key retail data. However, the Chinese yuan gained from the friendly dialogue between U.S. presidents and Chinese presidents in a virtual meeting.

The Dollar Index (which tracks the greenback in relation to six currencies) traded 0.1% lower at 95.468 ET, close to a 16-month high.

0.1% fell to 6.3777. It was just above the five month low of 5.3777 reached earlier in session. The virtual meeting between U.S. President Joe Biden with his Chinese counterpart Xi Jinping went relatively smoothly. However, there were no significant positive developments. 

Leaders of the largest two economies of the world agreed to increase cooperation and communication. This positive tone has led foreign exchange markets to look at possible reductions in tariffs.

The Bank of England raised interest rates by 0.3% in December after releasing stronger than anticipated U.K. data. 

 British employers added  a net 160,000 workers to their payrolls in October, indicating that the economy had negotiated the end of the government’s job-protecting furlough scheme successfully.

At its most recent meeting, the Bank of England decided not to raise interest rates. It wanted to assess how the wider economy performed after it ended its employment support package. However, these figures should allow the central bank’s focus on inflation.

U.S. October data are expected later in this session. They will be closely monitored to ensure that consumer demand is not affected by high inflation. This could put more pressure on Federal Reserve officials to take action against rising prices.

The index gained 0.1% to 1.1375 elsewhere, rebounding a bit after falling to a low of 16 months earlier, hit by Covid-19-related cases in the European region.

Austria, the Netherlands and other European countries have implemented partial lockdowns. Others are looking at similar moves as they approach Christmas and the new winter season.

European Central Bank President Christine Lagarde was insistent at her testimony in the European Parliament on Monday that the central bank wouldn’t be hurried into interest rate hikes, and this dovish stance is also weighing on the single currency.

The rate rose 0.1%, to 114.25. It fell 0.1% to 0.7339 when Philip Lowe from the Reserve Bank of Australia resisted increasing rates as early as 2022.