USD extends gains post Trump–Xi summit and FOMC – OCBC
|US Dollar (USD) extended its rise in what looked like 'buy rumor, sell the fact' post-Trump-Xi meeting and FOMC, while there were market chatters of month-end USD demand, OCBC's FX analysts Frances Cheung and Christopher Wong note.
US–China agree to one-year trade truce, resume TikTok deal
On Trump-Xi summit, both sides reach an agreement. Some highlights include trade truce being extended for another year; China will restart buying 12m tons of soybeans this year, and 25m tons in 2026; China to postpone export restriction on rare earth for a year; US will reduce fentanyl tariff rate to 10%; both parties will hold off imposing port fees for another year; TikTok transaction will resume. Trump later told reporters that it was an amazing meeting and on a scale of 0 – 10 with 10 being the best, the meeting was a 12."
"USD rose broadly against a range of currencies. Even the USD/CNY daily fix was set higher at 7.0880 while rise in USD/JPY, post BoJ disappointment also contributed to the broad rise in USD/AXJs. With US-China tensions better managed, USD/AXJ may go back to being driven by idiosyncratic factors for now, until a clearer trend on the USD is established."
"We still look for USD to trend moderately lower but in the absence of US data and non-committal comments from Fed Chair Powell, some position adjustment may take place first. Fed on easing cycle and a more cordial relations between US and China should remain supportive of RMB, risk-proxy FX including AUD while USD may trade on the backfoot, unless equity sentiment faces a surprise shock."
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.