•The dollar fell to a one-week low on Tuesday as investors unwound long bets on the currency, anticipating the Federal Reserve could slow the pace of U.S. interest rate hikes after this week’s policymaking meeting.

The dollar index fell 0.09 percent lower at 97.01 at 12:55 p.m. ET, after earlier sliding to its weakest since Dec 10.

With the prospect of a “dovish rate hike” keeping the dollar in check, the euro on Tuesday rose 0.16 percent to $1.1364. It has recovered all of its losses from Monday when it was hit by weak euro zone data.

The greenback weakened for a second straight session. A rout on Wall Street on Monday, recent mixed U.S. and global economic data, and persistent market volatility have bolstered a view that the Fed’s widely expected rate hike on Wednesday could mark the end of three years of steady rate increases.

U.S. President Donald Trump’s critical comments on the Fed did not help the dollar’s cause either.

In a tweet overnight, Trump took another swipe at the Fed, saying it was “incredible” for the central bank to even consider tightening policy given the global economic and political uncertainties.

• “While (the Fed) remaining on hold would be a significant surprise and a significant U.S. dollar-negative, there is little doubt that equity market volatility is creating some headaches for policymakers,” said Shaun Osborne, chief FX strategist, at Scotiabank in Toronto.

Osborne noted that Fed rate hike expectations have slipped, with markets now pricing in a 70 percent chance of a rate increase, down from a 78 percent chance on Monday.

“That is quite a significant move right ahead of the policy decision,” he said.

• Investor confidence has deteriorated, leading to the gloomiest outlook for the world economy in a decade, a survey by Bank of America Merrill Lynch found.

• The Federal Reserve is expected to raise interest rates by a quarter point Wednesday and also signal it will not be raising rates as much as it had previously forecast.

Strategists say that may soothe volatile financial markets, but the Fed has a tough task in terms of explaining its actions in a way that will not sound too alarmist about the economy or too unconcerned about deteriorating financial conditions.

The Fed will be taking the fed funds rate range to 2.25 to 2.50 percent, and Fed watchers expect it to remove language in its post-meeting statement that says it will continue with ‘gradual’ rate increases. According to its forecast, the Fed was expected to raise interest rates three more times next year, but economists now expect that will change to show two more hikes next year, with another possible in 2020.

The Fed’s rate hike is coming against a backdrop of financial market turbulence. Markets have been reacting to concerns about rising interest rates as well as concerns trade wars and weaker global data could lead to a recession. Fed Chairman Jerome Powell, unlike other Fed chairs, has also faced a stream of criticism from the White House, with President Donald Trump protesting rate hiking policy and in a tweet on Tuesday, the Fed’s balance sheet policy.

The Fed is also expected to lower its growth forecast and possibly its inflation forecast to under 2 percent. The Fed raised its 2019 growth rate to 2.5 percent in September but could bring it back down to 2.3 or so, Fed watchers said.

• Goldman Sachs Asset Management expects to see improving economic conditions in emerging markets over the coming months, thus providing a springboard for the value of regional stocks and currencies.

Emerging market currencies have been under pressure throughout much of 2018, on the back of a stronger U.S. dollar that is trading up almost 5 percent against a basket of six major currencies this year.

• Chinese President Xi Jinping addressed his nation Tuesday morning in Beijing to commemorate the 40th anniversary of China’s “reform and opening up ” — and he struck a relatively defiant tone in response to international calls for changes to his country’s economy.

His remarks focused on how China’s Communist Party guided the nation to its economic success and emphasized the country’s right to pursue its own path going forward. In an address that lasted nearly 1 1/2 hours, Xi did not mention trade tensions with the U.S. and made only passing reference to market-oriented reform goals that previous speeches have discussed in detail.

That idea of progress contrasts with other countries’ increasingly vocal demands for less state control and could have significant consequences for whether the U.S. reaches a trade deal with China by the end of its 90-day tariff ceasefire.

• Chinese importers returned to the U.S. soy market on Tuesday for their second round of purchases since the two countries agreed to a truce in their trade war, four traders with knowledge of the deals and the U.S. Soybean Export Council said.

The purchases are the latest evidence that China is making good on pledges to buy U.S. agricultural goods as part of the 90-day trade detente agreed to by U.S. President Donald Trump and his Chinese counterpart, Xi Jinping.

It was unclear how much China would buy. Last week, state-run companies booked more than 1.5 million tonnes of U.S. soybeans for shipment from January to March, the country’s first major U.S. soy purchases in six months.

• Italy has reached a deal with the European Commission over its contested 2019 budget, a spokeswoman at the economy ministry said on Tuesday, adding that the accord would be formalized on Wednesday in Brussels.

• The White House said on Tuesday it was searching for ways to unilaterally fund the building of a controversial wall on the U.S.-Mexico border that Congress is balking at, possibly easing chances of a government shutdown this weekend.

Previously, Trump had demanded that Congress approve $5 billion in new funds for the wall that he argues is needed to stop illegal immigrants and drugs from entering through the southwest border.

On Tuesday, Trump said it was too early to say whether a partial government shutdown will be averted by a Friday midnight deadline when existing funds for several agencies expire. “We’ll see what happens,” he told reporters.

• Britain risks driving banks overseas if current high levels of taxation on the industry are maintained after Brexit, a bank lobby group said on Wednesday.

Banks in London have already begun to make plans to move staff abroad ahead of Brexit, which will make it more difficult for them to do business in the European Union from Britain.

• Oil prices plunged about 7 percent to a more than 15-month low on Tuesday as the United States and Russia continue to pump at record levels even as analysts warn that signs of faltering demand are emerging.

U.S. West Texas Intermediate crude ended the session down $3.64, or 7.3 percent, at $46.24. Losses accelerated ahead of WTI’s settlement, with the contract closing at its lowest level since Aug. 30, 2017. U.S. crude fell 8 percent after the settle to a low of $45.79 a barrel.

Brent crude, the international benchmark for oil prices, fell $3.35, or 5.6 percent, to $56.26, a 14-month closing low. It fell to a low of $55.89 after the close.

Reference: CNBC, Reuters