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Dollar strengthens as US and China reach trade agreement
On Tuesday, the dollar gained significant strength after China and the US agreed to a 90-day rollback of import tariffs they had imposed on each other. According to Reuters, the news triggered a relief rally in the markets.
Easing trade tensions between Washington and Beijing have prompted traders to pare back bets of Federal Reserve rate cuts. With reduced risks to US GDP growth, the need for additional economic stimulus through lower borrowing costs appears less urgent. As reported by Reuters, markets are now pricing in just 56 basis points of Fed rate cuts by December.
Against this backdrop, the dollar is hovering near a one-month high against a basket of major currencies, trading around 101.5. Meanwhile, US Treasury yields are also climbing, the news agency notes.
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