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Dollar Turns Weak Again

After advancing a bit early on in the session on Tuesday, the U.S. dollar gave up its gains and then spent most part of the day below the flat line, as traders weighed the impact of the ongoing trade war and looked ahead to some crucial economic data due this week.

Expectations about a rate cut by the Federal Reserve sometime in the near future contributed as well to the dollar's sluggish display.

The Fed, which is scheduled to announce its policy and rate decision after their meeting on June 18 -19, is widely expected to hold rates this time around.

U.S. President Donald Trump has once again called for a weaker dollar. He tweeted that Euro and other currencies are devalued against the dollar, putting the U.S. at a big disadvantage. Fed interest rate way too high, he added.

The dollar index, which advanced to 96.88 earlier in the day, dropped to a low of 96.64 and was last seen moving around 96.70, down 0.06% from previous close.

Against the euro, the dollar was down 0.15%, at $1.1329, after weakening to $1.1339 earlier.

The British Pound Sterling gained about 0.3% against the greenback with a unit fetching $1.2724, compared to $1.2686 late Monday.

The Japanese yen was slightly weak against the dollar, with a unit of dollar fetching 108.51 yen, up from 108.45 yen on Monday.

The dollar was little changed against the Aussie, gained about 0.11% against the loonie at 1.3283 and was up 0.23% against Swiss franc at 0.9921.

The Chinese yuan was gaining 0.28% against the dollar with a unit of the U.S. currency buying 6.9914 yuan, compared to 6.9310 yuan on Monday.

In economic news from U.S., the Labor Department said its producer price index for final demand inched up by 0.2% in May after rising by 0.2% in April. The uptick in prices matched economist estimates.

The report also said the annual rate of growth in producer prices slowed to 1.8% from 2.2% in April, coming in below estimates for an increase of 2%.

The annual rate of core producer price growth also dipped to 2.3% in May from 2.4% in April, matching expectations.

In eurozone economic news, survey data from the behavioral research institute Sentix showed eurozone investor confidence eroded sharply in June as a renewed escalation in trade tensions between the US and China hurt sentiment in the single currency bloc.

The investor confidence index for the euro area fell by 8 points to -3.3 from +5.3 in May. Economists had expected a score of +2.5.

The current situation measure of the survey dropped to 6 from 11 and the expectations index plunged 12 points to -12.3, the lowest level since February.

The survey also found that investors are now expecting stimulus from the central banks, especially the US Federal Reserve. The corresponding theme index of the survey climbed 11 points to 22.25, its highest level since July 2016.

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