Dollar holds steady after US, China reach framework deal to ease export curbs

The dollar was steady against its major peers on Wednesday, after U.S. and China agreed on a framework for a trade agreement that investors hoped could potentially pave the way to resolving a damaging trade war between the world’s two largest economies.

In early Asia trading, the dollar was down 0.14% against the Japanese yen at 144.770, and slipped 0.13% against the Swiss franc to last change hands at 0.8218.

The euro was flat at $1.1427, while China’s offshore yuan was little changed at 7.1881 per dollar.

An index that measures the greenback against six other currencies was little changed and was last at 99.068.

U.S. Commerce Secretary Howard Lutnick said that U.S. and Chinese officials concluded keenly watched talks in London that lasted for two days and agreed to put their trade truce reached last month in Geneva back on track.

The framework included resolving China’s export restrictions on rare earth minerals and magnets, and will also remove some U.S. export restrictions that were recently put in place. “The devil is going to be in the details and importantly whether this can help to reestablish trust between President Xi and President Trump, which has clearly been broken since the Geneva Agreement was published,” said Ray Attrill, head of FX strategy at National Australia Bank. “But it’s way too early to say that we know we’re in the midst of establishing a cast iron, new U.S.-China trade agreement.”

Much of the year has been dominated by investors fretting over the likelihood that U.S. President Donald Trump’s erratic policies could tip the U.S. economy into a recession, and in turn hurt global growth.

The erosion of investor confidence in U.S. assets has severely undermined the dollar, which is down more than 8% so far this year.

Later in the day, investors will closely parse a U.S. consumer inflation report that could reflect the economic impact of tariffs on prices, potentially determining the trajectory of the Federal Reserve’s monetary policy for the rest of the year.

The Fed is expected to hold rates steady next week, with traders pricing in nearly two 25-basis-point cuts by the end of the year.

UK’s sterling was marginally higher at $1.35 as markets awaited British finance minister Rachel Reeves’ public spending plans. The currency came under pressure overnight after data pointed to a weak labour market.