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U.S. Dollar Nosedives Ahead Of Fed Meeting

The U.S. dollar lost ground against its major opponents in the European session on Tuesday, as investors awaited the Fed meeting beginning today amid speculation that it is likely to consider a brief pause to its next year's rate hike cycle on slowdown worries.

The Fed begins its two-day policy meeting later today and is expected to raise rates for a fourth time this year. However, the accompanying statement is likely to be dovish amid mounting risks to global growth.

Amid deepening rift about the funding for Mexican border wall, the U.S. government is heading for a partial shutdown from Friday.

U.S. President Donald Trump said last week that he is ready to face shutdown to get approval for US$5 billion down payment to accomplish his campaign promise to build a border wall.

U.S. treasury yields fell, with the benchmark yield on 2-year note falling 2.67 percent, while that of 10-year equivalent was down by 2.83 percent. Yields move inversely to bond prices.

In economic releases, U.S. housing starts and building permits for November are due at 8:30 am ET.

The greenback traded mixed against its major counterparts in the Asian session. While it fell against the yen and the pound, it held steady against the franc and the euro.

The greenback depreciated to a weekly low of 0.9900 against the franc, from a high of 0.9937 seen at 2:00 am ET. If the greenback slides further, it may find support around the 0.97 level.

Data from the State Secretariat for Economic Affairs showed that Switzerland's economy is set to expand this year and next at rates that are slower than expected earlier, mainly due to weak domestic demand.

Gross domestic product is forecast to grow 1.5 percent in 2019, which is less than the 2 percent expansion seen in September.

The greenback fell past the key 1.27 level against the pound, sliding to an 8-day low of 1.2706. The greenback is seen finding support around the 1.28 region.

The greenback slipped to an 8-day low of 1.1402 against the euro, after having advanced to 1.1337 at 2:00 am ET. The greenback is poised to find support around the 1.16 area.

Survey data from the Ifo Institute showed that Germany's business confidence slid to its lowest level in over two years.

The Ifo Business Climate Index dropped to 101 from 102 in November. Economists had expected a score of 101.7.

Following an advance to 112.86 against the yen at 5:30 pm ET, the greenback declined to an 8-day low of 112.25. The next possible support for the greenback is seen around the 110.00 level.

The greenback declined to a 4-day low of 0.7203 against the aussie and a 5-day low of 0.6879 against the kiwi and held steady thereafter. The greenback ended Monday's trading at 0.7178 against the aussie and 0.6803 against the kiwi.

Pulling away from a high of 1.3420 hit at 7:30 pm ET, the greenback edged down to 1.3391 against the loonie. Next key support for the greenback is likely seen around the 1.30 level.

Looking ahead, Canada manufacturing sales for October, U.S. housing starts and building permits for November are set for release in the New York session.

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