Morning Bid: Dollar selling takes a breather

A look at the day ahead in European and global markets from Ankur Banerjee

Investors are easing off heavy selling of the U.S. dollar after the Taiwan dollar led a dizzying surge in Asian currencies over the past two days. Still, the pause keeps the focus on the ramifications of erratic U.S. trade policy.

The lack of concrete details on any trade deals between the U.S. and its partners has left investors back where they were: uncertain, jittery and hungry for good news.

The optimistic sentiment from last week, following Beijing's statement that it was considering Washington's offer for trade talks, now seems distant.

European stock futures point to a listless opening as markets mark time ahead of the Federal Reserve's policy decision on Wednesday. Although the central bank is likely to keep rates on hold, what it says will potentially have more sway on sentiment.

Before this, April's Purchasing Managers' Index (PMI) data from Europe, due later on Tuesday, will underline the extent of disruption caused by U.S. President Donald Trump's fluctuating tariff policies.

Investors are also monitoring European car makers after Ford Motor suspended its annual guidance because of uncertainty around the United States.

While the Taiwan dollar's unprecedented move has grabbed attention, other significant currency shifts have occurred across Asia.

The Malaysian ringgit, for example, surged nearly 1.5% on Monday to its strongest since October. It has weakened since but remains near the landmark level.

Hong Kong's de-facto central bank stepped into the foreign exchange market on Tuesday as the currency hit the top end of its band for a fourth time this month.

The broad selloff in the U.S. dollar this time against Asian currencies has stoked speculation that regional economies might be willing to let their currencies strengthen to secure U.S. trade concessions.

Whether that helps them to get trade deals over the line remains to be seen.

Key developments that could influence markets on Tuesday:

Economic events: April PMI data for France, Germany, UK and euro zone

Earnings: Ferrari and Telenor

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(Editing by Jacqueline Wong)