The U.S. dollar appeared set for continued strength on Monday after the U.S. paused its trade war, as markets bet that would offset signs of a slowing global economy and likely keep the U.S. Federal Reserve on track to tighten policy gradually.
The U.S. trade war hit the pause button at the G-20 meeting in Buenos Aires, with U.S. President Trump and Chinese President Xi Jinping agreeing to hold off on planned tariff increases for 90 days while trade talks continue. The dinner meeting between the two had been closely watched, with markets already beginning to price in optimism ahead of time that something positive might emerge.
The Trump administration has put a 10 percent tariff on US$200 billion worth of imports from China; before this latest agreement, that had been set to increase to 25 percent on 1 January. In exchange, China has agreed to start buying “a not yet agreed upon, but very substantial” amount of U.S. agricultural products, effective immediately.
It’s not yet clear if that will be enough to head of rising bankruptcies among U.S. farmers who have been hard hit by retaliatory tariffs from China, as well as by Trump pulling the U.S. out of the Trans-Pacific Partnership trade deal, which has made it more difficult for them to access other regional markets, such as Japan.
The U.S. dollar index, which measures the greenback against a basket of currencies was at 97.12 at 8:05 A.M. SGT after climbing as high as 97.31 on Friday from as low as 96.78, according to ICE futures data.
The 10-year U.S. Treasury note yield was at 3.037 percent at 8:15 A.M. SGT, spiking up from as low as 2.992 percent late on Friday, according to Tullett Prebon data.
The euro/dollar was at 1.1333 at 8:13 A.M. SGT after trading in a 1.1304 to 1.1401 range on Friday, according to DZHI data.
The British pound/dollar was at 1.2750 at 8:13 A.M. SGT after trading in a 1.2734 to 1.2810 range on Friday, according to DZHI data.
The dollar/yen was at 113.706 at 8:13 A.M. SGT after trading in a 113.31 to 113.72 range on Friday, according to DZHI data.
The dollar/yuan was at 6.9557 at Friday’s close after trading in a 6.9401 to 6.9558 range during the session, according to DZHI data.
The dollar/Singapore dollar was at 1.3693 at 8:14 A.M. SGT after trading in a 1.3688 to 1.3731 range on Friday, according to DZHI data.
The dollar/Malaysian ringgit was at 4.1750 in early Monday trade after trading in a 4.1798 to 4.1900 range on Friday, according to DZHI data.
The dollar/Indonesian rupiah was at 14,300 at Friday’s close after trading in a 14,250 to 14,403 range during the session, according to DZHI data.