The United States and China announced a preliminary trade deal, averting additional tariffs on Chinese goods that the US was set to be implemented on Dec. 15.
The interim deal was announced on Friday after more than two and a half years of on-and-off negotiations between Washington and Beijing, cooling down their trade war. US reduced tariffs in exchange for Chinese purchases of American farm products, manufactured and energy products. The United States also agreed to halve the tariff rate, to 7.5%, on $120 billion worth of Chinese goods.
China has also pledged in the agreement to better protect U.S. intellectual property, to curb the coerced transfer of American technology to Chinese firms, and to avoid manipulation of its currency.
U.S. Trade Representative said the deal would nearly double U.S. exports to China over the next two years and was “totally done”. A date for senior U.S. and Chinese officials to formally sign the agreement was still being determined, he added. However, China remained cautious ahead of the signing of the agreement.
The 17-month-old trade dispute between the world’s two largest economies has roiled financial markets and taken a toll on world economic growth. Investors sought more clarity on the “phase one” trade deal between the United States and China.
START TRADINGForex – Preliminary Trade Deal totally done
Trade-sensitive currencies such as the Australian dollar held below four-month highs on Monday. Relief following a U.S.-China trade agreement gave way to caution due to lack of details.
The dollar index, which measures the greenback’s value against a basket of currencies, was slightly lower on the day at 97.02.
The dollar was a tad firmer at 109.43 yen.
The Australian dollar fetched $0.6874, easing from Friday’s four-month high of $0.6939.
The New Zealand dollar was dropped 0.3% at $0.6611 after climbing to a four-month high at $0.6636 on Friday.
The Canadian dollar strengthened 0.3% to its highest level in almost six weeks at $1.3127.
The euro rose 0.2% to $1.1142, but also off last week’s peaks. It showed little immediate reaction to data showing euro zone business growth remained weak in December.
The pound sterling rose 0.3% on Monday, still boosted by last week’s general election victory for Boris Johnson’s pro-Brexit Conservative party. Even in the face of weak PMI data, as November British businesses endured their worst downturn since mid-2016, the pound is little affected. The Bank of England meets on Thursday.
Having risen as much as 0.7% in early London trading, it was last up 0.3% at $1.3370. Against the euro, it was broadly flat at 83.335 pence.
Oil prices held near three-month highs on Monday, supported by last week’s announcement of an initial US – China trade deal. Brent crude oil futures were up 19 cents, or 0.29%, to $65.41 a barrel by 1305 GMT. WTI was up a cent, or 0.02%, to $60.08 a barrel.
Gold steadied on Monday as the dollar weakened. Spot gold was little changed at $1,475.50 per ounce.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money