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Dollar Little Changed Ahead Of Fed Policy

The U.S. Dollar was little changed for a second straight session as traders stayed reluctant to create significant long or short positions on Tuesday, as they awaited the Federal Reserve's monetary policy statement.

The dollar index rose to 97.77, but failed to hold there and retreated briefly into negative territory before edging up to 97.63, netting a gain of about 0.07%.

The Fed's two-day meeting commenced today. Although the Fed is expected hold its benchmark rate unchanged, its accompanying statement is eagerly awaited as it is likely to provide clues about future rate decisions. It is expected that the central bank will announce a rate cut in July.

The European Central Bank President Mario Draghi said today that the central bank still has room to cut interest rates and measures to cushion the side effect from low interest rates, triggering accusation from the US President Donald Trump that such comments were unfair to his country.

Speaking at the ECB Forum on Central Banking in Sintra, Portugal, Draghi said, "Further cuts in policy interest rates and mitigating measures to contain any side effects remain part of our tools."

"And the APP [asset purchase programme] still has considerable headroom."

U.S. President Donald Trump accused Europe of currency manipulation saying Draghi's comments, which led European market higher, were unfair to the US.

"Mario Draghi just announced more stimulus could come, which immediately dropped the Euro against the Dollar, making it unfairly easier for them to compete against the USA," Trump said in a tweet.

"They have been getting away with this for years, along with China and others."

The euro fell to $1.1197, losing about 0.2%. The euro fell against the Yen, Pound Sterling and Swiss franc too.

Against the pound sterling, the dollar shed about 0.18%, with the Sterling-Dollar pair trading at 1.2557.

Against the yen, the dollar was down 0.1%, with a dollar fetching 108.44 yen.

The dollar was weaker by 0.27% against the loonie at 1.3377. It gained 0.1% against Swiss franc, rising to 1.0001.

In trade news, Trump said in a post on Twitter that he had a "very good" telephone conversation with Chinese President Xi Jinping and will have an "extended meeting" at the G20 summit next week.

"Had a very good telephone conversation with President Xi of China. We will be having an extended meeting next week at the G-20 in Japan. Our respective teams will begin talks prior to our meeting," Trump tweeted.

The tweet from Trump has led to renewed optimism that the U.S. and China could finally reach an agreement to end their long-running trade dispute.

Trump had previously threatened to raise tariffs on another $300 billion worth of Chinese goods if Xi did not attend the G20 summit.

In U.S. economic news, a report from the Commerce Department showed new residential construction in the U.S. unexpectedly decreased from an upwardly revised level in the month of May.

The report said housing starts slid by 0.9% to an annual rate of 1.269 million in May from an upwardly revised April estimate of 1.281 million.

Economists had expected housing starts to edge up to 1.239 million from the 1.235 million originally reported for April.

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