On Tuesday, the U.S. dollar advanced versus the yen. The development was due to the growing optimism of the United States and China reaching a preliminary contract to scale back their straining trade war.
Meanwhile, the two currencies, the yen and the Swiss franc, which are often accepted as safe havens during times of economic or political strife, had losses. It was after investors became more comfortable taking on risk.
In addition, the Australian dollar held firm after the Reserve Bank of Australia (RBA) left monetary policy unchanged, as expected.
It has also stated the main ambiguity continues to be the prospect for consumer spending.
In recent days, Beijing and Washington have given inspiring signs of progress in trade talks.
Moreover, in a news report last Monday, the U.S. government indicated it is considering dropping some tariffs on Chinese goods.
Another local news report conveyed that China is reviewing locations in the United States where it could sign a so-called “Phase 1” trade deal.
Information on the “Phase 1” Trade Deal
The agreement was with the U.S. President Donald Trump.
Both countries have hit tariffs on each other’s goods in a trade war.
The trade conflict has dragged on for 16 months and elevated the possibility of a global recession.
Any progress in solving the conflict could possibly lift the dollar and riskier assets.
In addition, it will ease concerns regarding the economic outlook and lessen the need for aggressive monetary easing.
Head of global market research at MUFG Bank in Tokyo, Minori Uchida, said “The mood is very much risk on, so that’s how investors will approach the market.”
He also added, “We’re getting some positive news about trade talks. This is all supportive of the dollar, and this trend could continue.”
Elsewhere, the dollar grew 0.17% to 108.77 yen in Asia, adding to a 0.4% gain yesterday.