On Monday, the US dollar increased in value against safe – haven currencies like the Japanese yen and the Swiss franc. This happened because weekend talks between the United States and China reduced worries about a harmful trade war between the world’s two largest economies. Also, global trouble spots seemed to calm down. Since US President Donald Trump started implementing wide – ranging tariffs in a somewhat chaotic way last month, the US dollar, US Treasury bonds, and stocks have all performed poorly. This has shaken the confidence that investors have in American assets.
Dollar Gains as US – China
After the talks in Geneva, Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer said on Sunday that an agreement had been reached with China to reduce the US trade deficit. There were not many details available, but a joint statement was expected on Monday. This week, the focus will be on US corporate earnings and economic data. This includes the consumer price index (CPI) figures that will be released on Tuesday. These will show how the trade dispute has affected the US economy and what people expect the US Federal Reserve to do regarding further interest rate cuts.
Michael McCarthy, the CEO of the online trading platform Moomoo Australia, said, “I think it’s too early to say that the US dollar will stop being a reserve currency. Once we have more clarity about global trade, I expect a more normal trading pattern to return.” He added, “US inflation data is clearly very important. For the Australian dollar, we’ll be looking at the unemployment data this week. But I think trade talks will probably have the biggest impact on market activity.”
Trade Hopes Ease Tensions
On the geopolitical side, India and Pakistan announced a ceasefire over the weekend. The two nuclear – armed countries had been fighting for four days, which had worried the markets. Also, Ukrainian President Volodymyr Zelenskiy said he was willing to meet Russian leader Vladimir Putin in Turkey on Thursday for direct talks. This would be the first such meeting since the early months of the 2022 Russian invasion of Ukraine.
The New Zealand and Australian dollars, which are often seen as representing risk – taking in the market, both increased. The New Zealand dollar went up by 0.3% to $0.5927, and the Australian dollar increased by 0.3% to $0.6432. The euro was at $1.1228, a 0.2% decrease. The British pound was trading at $1.3288, down by 0.3%. China’s offshore yuan rose about 0.2% to 7.224 yuan per dollar. Jason Chan, a senior investment strategist at Bank of East Asia, said that the progress in the US – China talks is good for the markets because it gives other trading partners something to refer to.
Related topics
