Investing.com - The U.S. dollar continued to fall against other currencies on Monday, while the pound gained ground as investors awaited an interest rate decision from the Federal Reserve.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, fell 0.21% to 93.59 as of 10:21 AM ET (14:21 GMT).
The Fed meets on Tuesday and Wednesday, with traders expecting a rate hike for the third time this year. The market has already priced in a 100% chance of a 25-basis-point increase.
Chances of an increase in December were at 86.1%.
Meanwhile, trade war concerns escalated after U.S. duties on $200 billion of Chinese goods and Chinese tariffs on $60 billion of U.S. products went into effect.
China cancelled mid-level trade talks with the U.S. as well as a proposed visit to Washington by Vice Premier Liu He, which had been scheduled for this week, saying the U.S. was bullying them.
“The door for trade talks is always open, but negotiations must be held in an environment of mutual respect,” state-run Xinhua News Agency reported. Negotiations “cannot be carried out under the threat of tariffs.”
Elsewhere, the dollar rose against the safe-haven yen, with USD/JPY inching up 0.02% to 112.61. In times of uncertainty, investors tend to invest in the Japanese yen, which is considered a safe asset during periods of risk aversion.
Sterling remained in focus, as a majority of Prime Minister Theresa May’s cabinet supported a Canada-style trade deal with the European Union, the Telegraph reported.
The news comes days after May said the UK and EU were at an impasse in Brexit negotiations. GBP/USD surged 0.46% to 1.3129. EUR/USD increased 0.32% to 1.1786.
The Australian dollar was lower, with AUD/USD down 0.36% to 0.7265, while NZD/USD fell 0.27% to 0.6662 and USD/CAD gained 0.05% to 1.2922.