The U.S. dollar rose sharply on Monday after the United States and China agreed to lower tariffs on each other’s goods, easing fears of a major trade war.
The U.S. said it will cut extra tariffs on Chinese imports from 145% to 30%, while China will reduce its tariffs on U.S. goods from 125% to 10%. The deal, made over the weekend, surprised investors in a good way and helped calm global markets.
The dollar went up strongly against other major currencies. It rose 1.9% to 148.16 yen and gained 1.5% against the Swiss franc to 0.8443. It also rose 1.1% against a group of other major currencies, hitting its highest level in more than a month.
The euro fell 1.3% to $1.111, its biggest drop in one day this year, and the British pound dropped 1% to $1.318.
The trade deal also boosted other currencies. The New Zealand dollar rose 0.5% to $0.5879, and the Australian dollar went up 0.3% to $0.639. China’s yuan reached its highest level in six months at 7.2001 per dollar.
The market got more good news when India and Pakistan announced a ceasefire after recent fighting. Also, Ukraine’s president said he is ready to meet Russia’s president in Turkey for peace talks later this week.
Investors are now watching U.S. inflation and retail sales data due this week. These reports will give clues about how the economy is doing and whether the Federal Reserve will lower interest rates again.
