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On Tuesday, the U.S. dollar erased its previous gains from the beginning of the week as the markets focused their attention on the upcoming events of the U.S. central bank who would be choosing their next leader.

Fed In Focus

U.S. President Donald Trump has already conducted an interview of the five candidates being chosen for the position including current Federal Reserve Chair Janet Yellen, John Taylor who is currently an economist at Stanford University, Gary Cohn who currently serves as President Trump’s chief economic adviser, Federal Reserve Governor Jerome Powell, and former Federal Reserve Governor Kevin Warsh. According to reports, Trump is close in choosing and deciding the Federal Reserve’s next chairman.

The U.S. dollar index traded 0.2% at 93.741 against six other major currencies. The Euro traded 0.12% higher on Tuesday against the U.S. Dollar to 1.1763. The previous gains of the greenback have sent the euro down during the previous week which was also weighed down by the political uncertainty in Spain. The Aussie also traded 0.12% up against the greenback during the same trading session.

USD/JPY Movement

The dollar traded 0.1% against the Japanese Yen to 113.35 yen from having previously touched a three month high during the previous trading session.

The previous gains of the USD/JPY pair were driven by the aftermath of the general elections held in Japan last Sunday which resulted in a victory for Prime Minister Shinzo Abe’s coalition that assured investors of his policies being kept and implemented which includes the steady monetary policy from the Bank of Japan.

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In July, the dollar continuously declined after the Federal Reserve announced that it would begin the winding down of its bond holdings soon.The results of Trump’s plans for a health care reform failing to get an approval from the Senate has also weighed in on the U.S. dollar during the period.

During the same period, the Federal Reserve also voted to leave the direction of the interest rate hikes on holds even after voting to raise interest rates the month before.

The USD traded down against the Japanese yen up until the end of the month due to the market’s observation of a slow inflation rate being a factor in the Fed Reserve preventing an interest rate hike before the end of the year.

The U.S. currency was further weighed in by the geopolitical concerns between the United States and North Korea from September until early October. However, just this month, the Federal Reserve announced that another rate hike before the end of the year might be in order due to the current economic and inflation rate.

The dollar then which previously traded against the yen at around 108.90 to 112.21 level has touched a three-month high on Monday due to Abe’s victory in Japan before it erased the gains it made on Tuesday as Trump’s decision draws to a close.

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