NEW YORK (Reuters) – The dollar rose on Wednesday as traders scaled back expectations of an aggressive interest rate decrease next month after comments from Federal Reserve officials that such a move may not be warranted at this time.

The greenback and the euro strengthened against the yen after U.S. Treasury Secretary Steven Mnuchin was quoted by CNBC as saying the trade deal between the United States and China is “about 90%” complete. Mnuchin’s comments were later restated to show he was using the past tense to describe progress in the U.S.-China talks.

The pullback in the yen and Swiss franc was limited as traders remain jittery over prospects at the G20 summit this weekend in Osaka, Japan, where U.S. President Donald Trump and Chinese President Xi Jinping are due to have a meeting. Some bids for both perceived safe-haven currencies persisted amid tensions between Iran and the United States.

Traders have been speculating whether Trump and Xi could at least reach an agreement to restart talks at the summit in a bid to avert more tariffs between the two nations.

“The base-case is that the tariffs could be delayed,” said Ilya Gofshteyn, senior EM macro strategist at Standard Chartered in New York. “Everything before the summit is just noise.”

Earlier Wednesday, Trump told Fox Business Network he would impose additional duties on Chinese imports if he does not clinch a deal with Xi.

At 10:41 a.m. (1441 GMT), the dollar was up 0.45% at 107.660 yen, while the euro was 0.38% higher at 122.34 yen.

The greenback was little changed against the euro at $1.1364.

The dollar index edged up 0.06%, pulling further away from a three-month low in the wake of comments from two Federal Reserve officials, which cooled expectations the central bank would lower key lending rates by an aggressive half a percentage point at its next policy meeting on July 30-31.

For a graphic on Dollar index, CFTC positionings, see – tmsnrt.rs/2ZWCeZl

On Tuesday, Fed Chairman Jerome Powell stressed the central bank’s independence from Trump, who is pushing for rate cuts. St. Louis Fed President James Bullard, considered one of the most dovish U.S. central bankers, surprised some investors by saying a 50 basis point cut in rates “would be overdone”.

The dollar fell last week after policy-makers opened the door to rate cuts in coming months.

Interest rates futures implied traders fully expect a rate cut from the Fed next month, but they now see a 26% chance of a 50 basis-point decrease, down from 30% late on Tuesday, according to CME Group’s FedWatch tool.

Elsewhere, the New Zealand dollar was a big gainer against the greenback. The kiwi rose 0.66% to $0.6683 after the Reserve Bank of New Zealand left rates unchanged at 1.5% at its policy meeting, though it signaled another cut was likely.

For a graphic on Bets on bold first rate-cut from the Fed, see – tmsnrt.rs/2XTkkpn

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