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Dollar advances on truce ahead of G20

All eyes are on the Trump-Xi meeting at the G20 summit in Japan as the US and China call a tentative truce.

Centtrip: Dollar advances on truce ahead of G20

The greenback has reached a one-week high against the Yen amid prospects of a potential breakthrough in the US-Chinese trade war.

Hong Kong’s South China Morning Post has reported that Washington and Beijing have agreed to a tentative truce ahead of a meeting between US President Donald Trump and his Chinese counterpart Xi Jinping on Saturday, 29 June at the G20 summit in Japan.

The Dollar yesterday, 26 June made substantial gains against the safe-haven Yen after US Treasury Secretary Steven Mnuchin suggested a trade deal between the US and China was “about 90 per cent” complete. Analysts soon realised Mnuchin’s comment on degree of progress in talks was in the past tense, but the cautious optimism remained intact.

If the US-Chinese relationship shows an improvement at the G20 summit, Beijing will no longer be in a hurry to take steps to stimulate its economy.

The implications of the meeting between the leaders of the two nations are huge for the US monetary policy. If the sides agree not to impose more tariffs, the Federal Reserve, in theory, would no longer need to cut interest rates. On the contrary, if the talks fail and more tariffs are inevitable, hesitant policymakers will get a nudge to take action.

The Dollar Index, measuring the greenback against a basket of six major currencies, rose by 0.15 per cent to 96.374.

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