The U.S. dollar rose slightly higher Tuesday, stabilizing after recent banking-induced losses as the prospect of upcoming trade talks between the U.S. and China helped ease some concerns over a renewed trade war.

The Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.2% higher to 98.570, after recording last week the biggest five-day retreat since late July.

Dollar stabilizes after banking woes
Attention in the foreign exchange markets has drifted away from concerns about the state of the U.S. banking sector with U.S. equities extending the rebound on eased credit market concerns.

"Zions Bank's earnings report was solid outside of the losses linked to fraud, even though scrutiny remains high on any other signs of credit stress in the system," said ING analyst Francesco Pesole, in a note.

The U.S. dollar has received a boost from Japanese yen weakness [see below], but also from expectations that U.S. President Donald Trump will be able to reach a trade deal with Chinese President Xi Jinping at a meeting between the two on the sidelines of an economic conference in South Korea next week.

Trade tensions between the world's two biggest economies have weighed on global confidence, with disputes over tariffs, technology and market access remaining largely unresolved.

Additionally, White House economic adviser Kevin Hassett said that the 20-day U.S. federal government shutdown was likely to end this week.

"Not much is moving on U.S.-China trade tensions ahead of the end-of-month scheduled meeting between Trump and Xi," added Pesole, "with the approach seemingly being a wait-and-see one mixed with some cautious optimism that Trump will get a deal out of China."(Cay)

Source: Investing.com