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Dollar Turns Lower After Early Gains Erode

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The dollar turned in a strong performance Tuesday morning, but has since reversed and has turned weaker against its major rivals. The lack of U.S. economic data kept some investors on the sidelines. However, things will begin to pick up tomorrow, with the release of the producer price index and wholesale trade data.

The International Monetary Fund slashed the global growth forecast for this year and next on Tuesday, citing an increase in the likelihood of further negative shocks, such as a full-blown trade war.

In its latest World Economic Outlook, released in Bali, Indonesia, the Washington-based lender forecast 3.7 percent growth for the world economy for this year and next. That is less than the 3.9 percent predicted in the April report and in a July update.

The US growth forecast for this year was retained at 2.4 percent, while the projection for next year was trimmed to 2.1 percent from 2.2 percent seen in July, citing the recently enacted trade tariffs.

The dollar climbed to a high of $1.1432 against the Euro Tuesday, but has since retreated to around $1.15.

German exports declined for a second straight month in August, defying expectations for an increase, preliminary data from the statistical office Destatis showed on Tuesday.

Merchandise exports fell a calendar and seasonally-adjusted 0.1 percent from July, when they decreased 0.8 percent. Economists had expected a 0.4 percent increase.

Imports dropped 2.7 percent after a 2.8 percent rise in July. Economists were looking for a 0.1 percent gain.

The trade surplus rose to EUR 17.2 billion in August from EUR 16.5 billion in the previous month. Economists had predicted a surplus of EUR 16.2 billion.

Speaking to BBC Radio 4's programme, Conservative MP Steve Baker said that there were at least 40 colleagues who are not going to accept a 'half in, half out' agreement shaped around the Prime Minister's Chequers blueprint.

MPs should be "unafraid to go forward without an agreement," he stated.

The buck rose to an early high of $1.3032 against the pound sterling Tuesday, but has since pulled back to around $1.3150.

The greenback ached an early high of Y113.391 against the Japanese Yen Tuesday, but has since eased back to around Y113.025.

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