Investing.com - The U.S. dollar weakened in early European trade Tuesday, but losses are minor as tensions in Russia remained fraught while traders await the release of economic data that may determine the timing of future Federal Reserve interest rate hikes.
At 02:00 ET (06:00 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower at 102.295.
Putin tries to draw line under turmoil
Russian President Vladimir Putin made a televised address on Monday evening, stating that he had deliberately let the weekend’s short-lived mutiny by the Wagner group of mercenaries go on as long as it did to avoid bloodshed.
This appeared to be an attempt to draw a line under an event that raised questions over his authority, but it’s doubtful these geopolitical tensions will dissipate quickly, and thus risk appetite will be under pressure for some time yet.
Economic data in focus
Aside from the events in Russia, sentiment remains pressured by worries over inflation and the potential for central banks, and the Federal Reserve in particular, to keep interest rates 'higher for longer'.
The Federal Reserve's preferred inflation gauge, the core PCE index, is due on Friday, and could be an important data input as the Fed heads into its next policy meeting in July.
Euro just higher ahead of ECB gathering
“Both central bankers and governments are under fire for having kept monetary and fiscal policy respectively too loose for too long,” said analysts at ING, in a note. “These (or at least monetary policy anyway) will be the hot topic for this week at the ECB annual symposium.”
The latest economic surveys have painted a worsening picture for Germany, the eurozone’s largest economy, with Monday’s Ifo business climate index the latest to show German business morale worsening.
However, ECB policymaker Martins Kazaks pointed earlier Tuesday to further interest rate hikes after its next meeting as inflation remains too high.
GBP/USD rose 0.2% to 1.2734, with sterling retaining some strength even after the latest CBI distributive trades survey indicated that retailers would continue to face challenges in the coming months.
The Chinese leader told delegates at the World Economic Forum in Tianjin earlier Tuesday that his country's economic growth in the second quarter will be higher than the first and is expected to reach the annual economic growth target of around 5%.