SINGAPORE —The dollar held strong gains on Tuesday as investors cheered a tariff deal between the United States and China to tap the brakes on a trade war between the world’s two largest economies that had fed fears of a global recession.
Washington and Beijing on Monday announced an agreement to slash the massive tariffs they had imposed on each other for 90 days, sparking a relief rally across markets that swept up global stocks and sent the dollar surging.
“It’s way better than the market was expecting,” said Rodrigo Catril, senior FX strategist at National Australia Bank.
“It’s just an indication of, for one, the US administration is quite sensitive to the impact (tariffs are) having on the economy, and some would say there’s been a serious walk back in terms of what they’ve done.”
Across currencies, the yen and the euro were among the largest losers against a resurgent dollar overnight.
The dollar was last down 0.1 percent at 148.29 yen and fetching 0.8448 against the Swiss franc, after having jumped 2.1 percent and 1.6 percent, respectively, against the two in the previous session.
The euro was up 0.1 percent at $1.1095, having similarly tumbled 1.4 percent on Monday.
“In terms of magnitude, I think it’s fair to say that the big moves have been seen. But for scope for an extension of the moves, I think particularly the euro and the yen will have a bias for those moves to extend a little bit further over the coming weeks,” said Catril.
