The greenback, treasuries and equities have taken a beating since US President Donald Trump’s often chaotic rollout of sweeping tariffs last month shook confidence in American assets.
After talks in Geneva, treasury secretary Scott Bessent and trade representative Jamieson Greer said yesterday a deal had been reached with China to cut the US trade deficit. Details were scarce but a joint statement is expected today.
The focus will also be on US earnings and data this week, including consumer price index (CPI) figures on Tuesday, for indications of how the trade spat has impacted the economy and expectations for further rate cuts by the US federal reserve.
“I suspect that talk of the demise of the US dollar as a reserve currency is premature and that we’ll see a more normal trading pattern resume once we have some clarity around global trade,” said Michael McCarthy, chief executive officer of online trading platform Moomoo Australia.
“US inflation data is obviously going to be very important, and for the Aussie we’ll be looking at the unemployment data this week, but I think it’s trade talks that are very likely to dominate market action,” he added.
In addition to US inflation data for last month, April retail sales due on Thursday will also provide the latest pulse on consumer spending.
The greenback climbed 0.4% to ¥145.93 and 0.5% to CHF0.8337.
The dollar index was little changed near a one-month high. The gauge is still down 3.6% from the April 2 announcement of Trump’s “Liberation Day” global tariffs.
On the geopolitical front, India and Pakistan announced a ceasefire over the weekend following the four days of fighting between the nuclear powers that had rattled markets. And Ukrainian President Volodymyr Zelensky said he was ready to meet Russian leader Vladimir Putin in Turkey on Thursday for direct talks, the first since the early months of the 2022 invasion.
The New Zealand and Australian dollars, widely seen as proxies for risk assets, advanced 0.3% to A$0.5927 and tacked on 0.3% at NZ$0.6432, respectively.
The euro stood at €1.1228, down 0.2%. Sterling traded at £1.3288, down 0.3%.
China’s offshore yuan rose about 0.2% to CN¥7.224 per dollar.
Progress in the US-China talks is positive for markets as it provides a reference point for other trading partners, said Jason Chan, senior investment strategist at Bank of East Asia.
“If even China can make a deal, then other Asian countries like Japan, India, and SEA countries could follow and progress their own trade talks,” Chan said.