The dollar turned positive against its rivals Tuesday, as investors weighed the latest escalation in the tit-for-tat tariff dispute between the U.S. and China, while a weaker euro also lifted sentiment.
The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, rose by 0.16% to 94.25, from a session low of 93.88.
China said it will impose new tariffs on U.S. goods worth $60 billion on Sept. 24, but levies would be instituted at lower rates than had been expected, according to a Reuters report.
China's tariff rate on a list of 5,207 U.S. products will range between 5% and 10%, below the previously touted 10% to 20% rate, Reuters said.
Investors seemingly took this as a sign that both sides were in no hurry to enter a full-scale trade war, as the United States also imposed tariffs at a lower rate than previously expected.
U.S. President Donald Trump announced late Monday new 10% tariffs on $200 billion in Chinese goods, below an original figure of 25% floated by the administration previously.
The trade-war proxy AUD/JPY, rose 0.71% to 80.95, while risk-sensitive USD/JPY rose 0.38% to Y112.31.
The Australian economy relies heavily on exporting raw materials (primarily metals), particularly to China, which accounts for about a third of Australian exports every year.
The dollar was also boosted by a retreat in the euro as investors grew nervous about Italy's chances of passing a budget within the European Union guidelines after Deputy Prime Minister Luigi Di Maio clashed with Finance Minister Giovanni Tria over budget proposals.
EUR/USD fell 0.18% to $1.1662, while GBP/USD fell 0.11% to $1.3136.
USD/CAD fell 0.49% to C$1.2983 as the Canadian dollar was boosted by rising oil prices on expectations that OPEC will decide against raising output at a meeting slated for the weekend.
The loonie also remains sensitive to trade talk as the United States and Canada continue efforts to hash out an agreement on a revamp of the North American Free Trade Agreement (NAFTA).
