Dollar Gains as U.S.-China Trade Talks Ease Market Tensions

The U.S. dollar strengthened in early Asian trading Monday after progress in weekend trade negotiations between the United States and China helped ease fears of a trade war. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer said a deal had been reached in Geneva to reduce the U.S. trade deficit, boosting investor sentiment toward American assets. More details are expected Monday.

Markets have recently been volatile, with the dollar, U.S. equities, and Treasuries pressured by concerns over President Trump’s sweeping tariffs announced last month. However, hopes of reduced trade tensions and signs of geopolitical de-escalation helped drive early gains. Investors are also turning attention to upcoming U.S. data releases, including the Consumer Price Index (CPI) and retail sales due Tuesday, for clues on economic resilience.

Chris Weston, head of research at Pepperstone, noted strong dollar momentum, particularly against the yen, Swiss franc, and euro, heading into the key data week. “We head into U.S. core CPI and retail sales with the wind at the back of the USD,” he said.

The dollar index rose 0.2% in early Asian trade, although it remains down 3.6% since Trump’s “Liberation Day” tariff announcement on April 2. The greenback climbed 0.3% to 145.85 yen, while the euro slipped 0.2% to $1.1226. The New Zealand dollar, often seen as a barometer for global risk appetite, gained 0.2% to $0.5921, and the Australian dollar rose 0.19% to $0.6424.

Meanwhile, geopolitical tensions also showed signs of easing. India and Pakistan declared a ceasefire after four days of fighting, and Ukrainian President Volodymyr Zelenskiy said he is ready to meet Russian President Vladimir Putin in Turkey on Thursday for direct talks.