WASHINGTON — The U.S. dollar slipped against major global currencies on Monday as renewed optimism over a possible U.S.-China trade deal lifted investor confidence and increased demand for riskier assets.
The greenback fell against the euro, Chinese yuan, and Australian dollar, with traders shifting toward equities and emerging-market currencies after signs of easing trade tensions between Washington and Beijing.
“The market’s kind of euphoric,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York. “It looks like the U.S. and China have stepped back from the brink, and that’s driving gains across global markets.”
Trade Optimism Boosts Risk Appetite
President Donald Trump said Monday that the United States and China were set to “come away” with a new trade agreement, adding that he will meet Chinese President Xi Jinping later this week in South Korea.
The comments fueled a global rally in stocks, pushing investors out of safe-haven assets such as the dollar and gold.
Markets also reacted positively to several developments:
- Signs that U.S.-China relations are stabilizing.
- New trade frameworks between the U.S. and several East Asian nations.
- A strong performance by Argentine President Javier Milei’s party in midterm elections, signaling continued economic reform efforts in Argentina.
The dollar index fell 0.11% to 98.84, while the euro climbed 0.15% to $1.1643.
Central Banks in Focus This Week
Investors are now watching a string of central bank meetings that could shape currency movements for the remainder of the week.
- The Federal Reserve and Bank of Canada are both expected to cut interest rates on Wednesday.
- The European Central Bank (ECB) and Bank of Japan (BOJ) are forecast to hold rates steady during their Thursday meetings.
Markets have already priced in a 25-basis-point Fed rate cut, but analysts are focusing on whether the Fed hints at slowing its quantitative tightening program — a move that could weigh further on the dollar.
Yuan Strengthens Ahead of Trump-Xi Meeting
The Chinese yuan gained after the People’s Bank of China (PBOC) set the official midpoint rate stronger than expected at 7.0881 per dollar, its firmest level since October 2024.
Analysts said the move could signal goodwill ahead of Thursday’s Trump-Xi meeting or an attempt by Beijing to stimulate domestic demand.
“Either way, a stronger renminbi supports emerging market currencies and is mildly negative for the dollar,” said Chris Turner, global head of forex research at ING.
The offshore yuan climbed to a one-month high of 7.1015 per dollar.
Australian Dollar Rises on Hawkish Central Bank Signals
The Australian dollar jumped 0.63% to $0.6554, boosted by hawkish comments from Reserve Bank of Australia (RBA) Governor Michele Bullock.
Bullock noted that a 0.9% rise in core inflation for the third quarter was a “material miss” to forecasts and would be weighed carefully when the RBA meets next week to decide on potential rate changes.
Yen Holds Steady as Japan Prepares for Trump Meeting
The Japanese yen traded roughly flat at 152.92 per dollar, as traders looked ahead to Tuesday’s meeting between President Trump and Japan’s new Prime Minister Sanae Takaichi. The two leaders are expected to discuss trade and fiscal policy coordination.
Recent weakness in the yen has been tied to expectations that Japan may pursue expansionary fiscal policies under Takaichi’s administration.
Government Shutdown Adds Economic Pressure
The ongoing U.S. government shutdown, now in its 27th day, added another layer of uncertainty. Economic analysts warn that prolonged disruption could dent growth, particularly as federal employees in key sectors remain unpaid.
The crisis has already affected air travel, with more than 5,600 flights delayed nationwide on Monday due to air traffic controller absences and FAA staffing shortages.
Cryptocurrency Market Moves Higher
In digital assets, Bitcoin rose 1.82% to $115,454, benefiting from a broader risk-on sentiment across markets.
