Dollar Trading Mixed Due To Trade Uncertainty

The dollar has recovered from its early losses against its major European rivals Tuesday afternoon, but remains down against the Japanese Yen. The initial excitement over the trade war truce reached by President Donald Trump and Chinese President Xi Jinping at the G20 summit over the weekend has cooled.

Uncertainty about whether the 90-day truce will give the U.S. and China enough time to reach a long-term trade agreement has caused traders to adopt a more cautious demeanor.

News that U.S. Trade Representative Robert Lighthizer, one of Trump's more hawkish advisors on trade with China, has been tapped to lead the negotiations has added to the skepticism.

The dollar dropped to over a 1-week low of $1.1418 against the Euro Tuesday morning, but has since rebounded to around $1.1340.

Eurozone producer price inflation accelerated further in October, defying expectations, figures from Eurostat showed Tuesday. Producer prices rose 4.9 percent year-on-year after a revised 4.6 percent in September. Economists had expected the rate to remain unchanged at September's original figure of 4.5 percent.

A leading European legal official said that the U.K. can still halt Brexit by revoking Article 50 without the consent of other EU member states.

The advocate general said Article 50 of the Libson Treaty allows the "unilateral revocation of the notification of the intention to withdraw from the European Union, until such time as the Withdrawal Agreement is formally concluded."

The Bank of England governor Mark Carney suggested that the probability of the occurrence of a disorderly Brexit is very low.

"Tail risk is tail risk, it's low probability. And MPs on the committee probably have a better idea about how Brexit will play out," Carney told Treasury Committee.

The buck fell to an early low of $1.2839 against the pound sterling Tuesday, but has since bounced back to around $1.2725.

British construction sector expanded at the fastest pace in four months in November, thanks to an increase in new work and consequent gains in job creation, though Brexit concerns damped expectations for the months ahead.

The CIPS construction Purchasing Managers' Index climbed to 53.4 from 53.2 in October, survey data from IHS Markit showed on Tuesday. Economists had forecast a score of 52.5.

The greenback has dropped to around Y112.735 against the Japanese Yen this afternoon, from an early high of Y113.637.

The monetary base in Japan was up 6.1 percent on year in November, the Bank of Japan said on Tuesday, coming in at 501.330 trillion yen. That follows two straight months of 5.9 percent gains.