The US dollar experienced a significant surge on Monday, May 12, 2025, following the announcement of a US-China trade agreement. This deal includes a 90-day pause on tariffs, which has the potential to alleviate trade tensions that have been affecting global markets.
U.S. Treasury Secretary Scott Bessent revealed the agreement after negotiations in Geneva, aiming to reduce reciprocal tariffs and allow time for further discussions. The tariff war had put over $650 billion in trade between the two countries at risk.
Following the announcement, the Chinese yuan increased to 7.2001 yuan per dollar. The dollar index (DXY) was trading at 101.63, a 1.29% increase from the previous close at 6:06 a.m. EDT. The dollar also gained strength against safe-haven currencies, rising 1.7% against the Japanese yen and 1.5% against the Swiss franc.
The euro fell 1.3% against the dollar to $1.1109, while the British pound decreased by 1.1% to $1.3175. Investors are now closely monitoring U.S. economic data, including the Consumer Price Index and retail sales figures, to assess the impact of trade tensions on the domestic economy.
Global markets reacted positively, with India's BSE SENSEX rising by 3.74% and Hong Kong's Hang Seng Index increasing by 2.98%. European markets also showed positive responses, with France's CAC 40 Index up 1.59% and Germany's DAX gaining 1.10%.
This US-China trade deal has boosted confidence in American assets. Monitoring upcoming U.S. economic data will be crucial to fully understand the trade tensions' effects.