The Aussie dollar and the Chinese yuan rose on Monday after U.S. President Donald Trump said he will delay an increase in tariffs on Chinese goods, citing “productive” trade talks, and that he and Chinese President Xi Jinping would hold a summit to seal a deal.
Australian dollar, considered a more liquid proxy for China risks, gained as much as 0.5 percent to $0.7162, reacting to Trump’s posts on Twitter, which came in early Asian trade on Monday.
The onshore yuan jumped as much as 0.6 percent to 6.6730 yuan against the dollar, its highest level since mid-July.
Trump’s announcement was the clearest sign yet that China and the United States are closing in on a deal to end a months-long trade war that has slowed global growth and disrupted markets.
Trump had planned to raise U.S. tariffs to 25 percent from 10 percent on $200 billion worth of Chinese imports if an agreement was not reached by Friday.
The dollar index against a basket of six major currencies barely moved and was at 96.488.
The Japanese yen stood almost flat at 110.67 yen to the dollar, while the euro firmed 0.1 percent to $1.1342.
Trump’s delay of higher tariffs “didn’t come as a total surprise,” said Shinichiro Kadota, senior forex and rates strategist at Barclays in Tokyo. “So I expect the market reaction should be somewhat limited and that the focus would shift back to global economic fundamentals.”
In his latest round of tweets, the president said that progress had been made on a host of divisive areas including intellectual property protection, technology transfers, agriculture, services and currency.
Trump did not set a new deadline for the talks to conclude, but he told U.S. state governors gathered at the White House that there could be “very big news over the next week or two” if all went well in the negotiations.
China’s official Xinhua news agency said in a commentary that the goal of an agreement was getting “closer and closer”, but also warned that negotiations would get more difficult as they approached the final stages.
Elsewhere, the New Zealand dollar rose 0.3 percent to $0.6864, also helped by a jump in retail sales in the fourth quarter, tempering concerns of softer growth in the country’s economy.
The British pound was idling at $1.3068 as markets awaited some clarity on where Brexit talks were heading.
Prime Minister Theresa May put off a vote on her Brexit deal until as late as March 12 – just 17 days before Britain is due to leave the EU – setting up a showdown this week with lawmakers who accuse her of running out the clock.
The Telegraph reported that May was considering whether to delay Britain’s exit for up to two months.
Markets are also awaiting testimony by U.S. Federal Reserve Chairman Jerome Powell on Tuesday and Wednesday before the congressional panels on economy and monetary policy.
Friday will see a spate of health reports on global manufacturing activity, including one from the U.S. Institute for Supply Management (ISM). Flash surveys suggested industrial downturns were deepening in Japan and Europe.