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Investing.com - The U.S. dollar traded largely unchanged Monday, with traders wary ahead of the week’s key events - the July U.S. CPI release; the meeting between U.S. President Donald Trump and Russian President Vladimir Putin; and the deadline for Washington and Beijing to strike a tariff deal.
At 04:05 ET (08:05 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded marginally higher to 98.050, steadying after last week’s steep losses.
July CPI looms large
The dollar has been on the backfoot since the release of the weak payrolls report at the start of the month, as this has lifted expectations that the Federal Reserve will cut interest rates at its next meeting in September.
Traders are currently pricing in an over 90% chance of a Fed cut next month.
The focus now turns to the release of the consumer prices data for July, due on Tuesday, especially as analysts and central bankers have warned that the Trump administration’s tariffs are expected to boost inflation.
“Consensus is expecting another acceleration in core CPI, to 0.3% month-on-month (3.0% year-on-year), in this week’s July print,” said analysts at ING, in a note. “That is a number that can probably be seen as acceptable for the Federal Reserve to proceed with a September cut, given the backdrop of a significantly weaker jobs market.”
Trade talks were also in focus as Trump’s August 12 deadline for a deal between the U.S. and China draws nearer, with both sides seeking to close a deal averting triple-digit goods tariffs.
The market fully expects another truce, especially after the Financial Times reported over the weekend that chipmakers Nvidia (NASDAQ:NVDA) and AMD (NASDAQ:AMD) have agreed to give the U.S. government 15% of their revenue from chip sales to China, the Financial Times reported on Sunday.
Euro looks to Ukraine peace talks
In Europe, EUR/USD traded 0.1% higher to 1.1651, helped by optimism that the talks between the Russian and U.S. presidents this week will form the basis for a truce in the Ukraine conflict.
“The considerable uncertainty surrounding the outcome and the reduced G10 FX sensitivity to the Ukraine conflict limit the case for significant adjustments to our EUR view at this time,” said ING.
GBP/USD traded largely flat at 1.3451, ahead of Tuesday’s widely-watched monthly employment data.
Hiring intentions by British businesses fell to their weakest since the COVID-19 pandemic, with a survey by the Chartered Institute of Personnel and Development saying only 57% of private sector employers planned to recruit staff over the next three months.
This was the lowest since the start of 2021 though only slightly down from 58% in the last quarterly survey.
Yuan awaits China-U.S. trade talks
Elsewhere, USD/CNY edged slightly lower to 7.1830, after data released over the weekend showed deflation remained largely in play in July.
Chinese consumer price index inflation was flat, while producer price index inflation shrank more than expected. The print highlighted fading support from Beijing’s recent stimulus measures.
U.S.-China trade relations remain in focus this week ahead of an August 12 deadline for a permanent trade truce between the two countries.
Washington and Beijing had agreed to temporarily lower their respective trade tariffs earlier this year, and were seen working towards a more permanent trade deal, with President Donald Trump setting an August 12 deadline for an agreement.
Trump signaled last week that he was likely to extend this deadline, with dialogue between the world’s biggest economies set to continue.
USD/JPY traded 0.1% lower to 147.63, in thin trading with Japanese markets closed for a public holiday, while AUD/USD slipped 0.1% to 0.6519, before Tuesday’s Reserve Bank of Australia meeting, where the central bank is widely expected to cut interest rates after a surprise hold in July.