Global Currencies React as U.S.-China Trade Deal Sparks Optimism

The U.S. dollar weakened on Monday against the euro, Chinese yuan, and Australian dollar as optimism over a potential U.S.-China trade deal increased risk appetite, decreasing demand for the greenback. The currency markets remained relatively stable as traders awaited significant central bank meetings scheduled for this week.

President Donald Trump indicated that the United States and China are on the verge of reaching a trade agreement. Trump's anticipated meeting with Chinese President Xi Jinping in South Korea this week is fueling hopes of a beneficial outcome. Marc Chandler, chief market strategist at Bannockburn Global Forex, noted strong gains in global stock markets as markets cheered three key developments.

The markets are optimistic about the progress in U.S.-China relations, as well as U.S. trade frameworks with East Asian countries. Also, the success of Argentine President Javier Milei's party in legislative elections boosts confidence. Traders are closely watching upcoming central bank rate decisions for market direction.