Dollar sheds gain on U.S. concerns, Asia stocks tread water

The dollar surrendered short-lived gains on Tuesday as concerns about the U.S. economy and politics returned to the fore ahead of a Federal Reserve meeting, while a lack of catalysts kept Asian stocks subdued. 

European stocks look set for a stronger open, with financial spreadbetter CMC Markets expecting Britain's FTSE 100 .FTSE Germany's DAX .GDAXI and France's CAC 40 .FCHI to all open about 0.3 percent higher. 

The dollar earlier rose on expectations the Fed will signal at a meeting starting later on Tuesday its readiness to begin reducing its bond portfolio at its September meeting. 

Also lifting the dollar earlier were strong July manufacturing and services purchasing managers' surveys (PMIs). But then it fell back as investors feared that the surveys would not shake the Fed's cautious approach to monetary policy tightening. 

"Those who dared go long the dollar probably didn't see the current conditions as worthy of holding on for too long," said Matt Simpson, senior market analyst at ThinkMarkets in Melbourne. 

"Moreover, as technicals, sentiment and fundamentals point lower for the dollar, the expectation of a dull Fed meeting only adds to the reasons to not ‘bottom pick’ the dollar."  

The dollar fell 0.1 percent to 110.99 yen JPY=D4 on Tuesday, after touching a six-week low of 110.65 yen on Monday. 

The dollar index .DXY, which tracks the greenback against a basket of six major peers, pulled back a little to 93.919 on Tuesday. It still remained above Monday's low of 93.823, its lowest level since June 2016. 

The return of political risk is also weighing on the greenback. Jared Kushner, President Donald Trump's son-in-law and senior advisor, told Senate investigators on Monday he had met with Russian officials four times last year but said he did not collude with Moscow to influence the 2016 U.S. election.