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U.S. Dollar Slips After IMF Says Greenback Is Overvalued

Investing.com - The U.S. dollar dipped slightly on Wednesday but still remained near one-week highs after the International Monetary Fund said the greenback is overvalued.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, slumped 0.2% to 96.885 by 10:54 AM ET (14:54 GMT).

The IMF said in a report that the dollar exchange rates is 6% to 12% too high, while the euro is undervalued for Germany, but overvalued by 4% for France, based on economic fundamentals.

Meanwhile the report also warned that Brexit and the U.S.-China trade war are a threat to the global economy.

“An intensification of trade tensions or a disorderly Brexit outcome - with further repercussions for global growth and risk aversion - could .... affect other economies that are highly dependent on foreign demand and external financing,” the External Sector Report said.

U.S. President Donald Trump has repeatedly called on the Federal Reserve to lower rates in an effort to mirror similar moves by the European Central Bank. Trump has said he wants to weaken the dollar to support growth.

The dollar fell against the Japanese yen, with USD/JPY slipping 0.1% to 108.17.

GBP/USD recovered from earlier lows, rising 0.2% to 1.2426.

Elsewhere, EUR/USD was up 0.1% to 1.1218, AUD/USD slipped 0.2% to 0.700,m while USD/CAD declined 0.2% to 1.3062.

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