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Dollar Mostly Steady Against Major Currencies

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The U.S. dollar is mostly steady against most major currencies on Tuesday, with traders shunning riskier currencies amid renewed worries about global economic slowdown.

With the International Monetary Fund (IMF) cutting its world economic growth forecast for the current year and 2020, citing U.S.-China trade disputes, Brexit uncertainty and the partial government shutdown in the U.S., global equities drifted lower and riskier currencies lost support.

The British Pound Sterling traded firm against major rivals after data showed that wages in the U.K. grew at the fastest pace in a decade in the three months to November. The data also showed the jobless rate to have fallen to its lowest level since 1975, indicating a tightening labour market despite Brexit uncertainty. The pound was trading at 1.2957 against the greenback, gaining about 0.51%.

The yen was down by about 0.26%, at 109.38 a dollar and the Euro was down 0.06% at 1.1360 against the greenback.

The dollar index was flat around 96.30 this afternoon, coming off the day's high of 96.48, a three-week high.

The IMF now projects a 3.5% growth rate worldwide for 2019 and 3.6% for 2020, down 0.2 and 0.1 percentage points below its last forecasts in October.

In remarks at the World Economic Forum in Davos, Switzerland, on Monday, IMF Managing Director Christine Lagarde noted risks to the global economy are increasingly intertwined.

"Think of how higher tariffs and rising uncertainty over future trade policy fed into lower asset prices and higher market volatility," Lagarde said. "This in turn contributed to tightening financial conditions, including for advanced economies, which is a major risk factor in a world of high debt burdens. "

Although she does not expect a global recession, Lagarde said, "the risk of a sharper decline in global growth has certainly increased."

In U.S. economic news today, the National Association of Realtors released a report showing a much steeper than expected drop in U.S. existing home sales in the month of December.

NAR said existing home sales plummeted by 6.4% to an annual rate of 4.99 million in December after jumping by 2.1% to a revised rate of 5.33 million in November. Economists had expected existing home sales to slump by 1.3% to a rate of 5.25 million from the 5.32 million originally reported for the previous month.

With the much bigger than expected decrease, existing home sales tumbled to their lowest level since November of 2015.

Traders are looking ahead to the policy decisions from the European Central Bank and the Bank of Japan, due this week.

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