De-escalation of US-China trade relations supports dollar

The United States has been negotiating with China over their trade relations. Recent developments indicate visible progress in these talks. Reinforcement of positive market expectations is favorably affecting commodity prices as well as the dollar, according to Reuters.

Following Sunday's meeting between representatives of the world's two largest economies, the American officials managed to reach an agreement with China on reducing the US trade deficit. Other details of the talks remain undisclosed.

Reuters cited several expert opinions on the matter. For instance, Natixis chief economist Christopher Hodge believes that the de-escalation of trade relations between the two countries was inevitable. However, he does not see significant changes in their future cooperation. Tariffs may be reduced and not apply to all imported goods, but they will probably remain in place, potentially hindering the US economic growth, the expert noted.

Jack Ablin of Cresset Capital also sees the outcome of Sunday's meeting between the US and China positively, suggesting that both sides are likely to avoid a severe confrontation.