The dollar index came off a two and half month high hit last week as US China trade tensions escalated after US President Donald Trump on Friday threatened 100% tariffs on China from November 1. In response, China warned it would retaliate if Trump failed to back down on his threat to impose levies on Chinese imports. However, the greenback reduced loses after Trump during the weekend softened his tone, saying that China's economy 'will be fine' and that the US wants to 'help China, not hurt it.' Moreover, adding pressure on the dollar is uncertainty on US government shutdown and growing optimism of a Federal rate cut. Meanwhile, consumer confidence in the US deteriorated in early October, with the University of Michigan's Consumer Sentiment Index declining to 55.0 in its preliminary estimate from 55.1 in September. Nevertheless, downside in the DXY could be limited by weakness in euro and yen amid geo political tensions. Currently, dollar index is quoting slightly lower at 98.64.

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