Currencies Start Monday Cautiously, Awaiting More on US-China Deal

WASHINGTON, D.C. – Major currencies started early on Monday on a cautious note as market players still wait on whether the US and China will soon sign off on the long-standing trade deal to end the war that has been affecting the market and the global economic growth.

Xinhua, a news agency in China, reported on Sunday that the two countries have been making constructive discussions regarding trade on Saturday, during a high-level phone call. However, it didn’t give any further details about the talk.

From its 108.235 price point against the yen on Thursday, the dollar has gone up a bit and is currently trading at 108.75 yen as the hope for US-China trade deal coming through soon undercutting the yen.

The dollar is facing a resistance of about 109.00 with a moving average of 200 days. A breakthrough from its current price level is expected to open the way to retest if it could top-up its 109.50 five-month high earlier this month.

On the other hand, the Euro gained positively from the increasing risk appetite of market players. It bounced from its previous $1.0989 one-month low on Thursday to its current $1.10505 price point against the dollar. It has also helped push the dollar index down to 97.980, close to its lower levels since early in November.

According to a Senior Strategist at Daiwa Securities, Yukio Ishizuki, the currencies are most likely to be driven by headlines about the issues or concerns about the trade agreement between the US and China. Markets are waiting for some sort of updates, if not answers, about the trade deal soon, said Ishizuki.

The phase one of the trade agreement was originally set for last weekend. It was scheduled to be signed during the summit with Asian Pacific countries. However, Chile, the host nation for the summit, canceled the event because of ongoing domestic riots.

The long-standing trade war has affected the global manufacturing sector. The numbers for October reported by the Federal Reserve on Friday has gone down. There was a drop in the output at factories at about 0.6%, from September’s 0.5%, and the biggest dip since May 2018.

Still, the hopes that the trade deal will be signed soon has kept the market afloat, with the stock prices in the US market hitting new all-time highs on Friday.

On the other hand, the ongoing protests in Hong Kong are something that investors still have their sights on. The turmoil could hit the stock prices in the country and other parts of Asia, like the Australian dollar dropping slightly to $0.6815.