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NEW YORK, N.Y. – The signing of the first phase of the US-China trade deal had minimal effect on world currencies as traders already priced it in beforehand. Dollar rates weakened while the yen is predicted to follow.

The US dollar (USD) weakened on Wednesday as optimism over a new trade agreement has lost its shine. The index tracking how the greenback fares against the other six main currencies dropped to 97.14, the lowest its been in eight days.

The EUR/USD was trading up 0.1% at $1.1164. The pound sterling reached a six-day high of $1.3065 while the Australian dollar advanced 0.1% at $0.6916.

The previous weeks saw world markets gearing up for the trade deal signing, with both the US and China claiming the new agreement heralds the first step in resolving their trade disputes. But with the signing a done deal, the luster has apparently gone from the market.

According to MUFG currency strategist Lee Hardman, the signing of the trade deal was proof of the trade talks’ progress. Most of details of the deal were what the market predicted, so the confirmation that there were no surprises quickly dampened enthusiasm.

Analysts were also skeptical as to how long the deal would last as the agreement remains vague on how key issues would be resolved. There was also disappointment that the trade agreement revolved around China’s compromise on the purchase of American goods and services but with the tariffs remaining in place.

While the US dollar faltered in the wake of Wednesday’s event, China’s yuan was 0.1% higher. It was trading at 6.8852 per USD in offshore markets. It remained close to the six-month peak of 6.8662 it reached last Tuesday.

Seven in the USD/CNY pair has typically been a gauge for how the relationship between the two countries stand. With the yuan staying fixed below level seven indicates that investors are hopeful of the trade relationship between Beijing and Washington and its effect on the world market.

Like the dollar, the safe-haven yen has also lost some of its luster. The currency slipped by 0.1% and is at 110.3 per dollar. The JPY/USD is trying to recoup over the 110.00 level, and the reduced safe-haven demand is helping it.

The pair’s four-hour chart showed that it was neutral to almost bullish, with a 20 SMA providing strong support. The absence of a follow through past the 110.21 level ensures the Momentum Indicator remains in the midline. However, the RSI has advanced and is presently at 65.

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