USD stronger Friday as markets waited for Trump-XI meeting outcome

Published on: 12/3/18 9:00 AM

USD on Friday

On Friday (Nov. 30), the United States Dollar (USD) was stronger ahead of the planned meeting between United States President Donald Trump and China’s President XI Jinping. Reportedly, traders were waiting to see how talks between the two leaders progressed and how it might impact trade tension and the continuing strength of U.S. currency.

According to a Reuters report, the two leaders from the world’s two biggest economies were expected to begin their G20 summit in Buenos Aries on Friday. However, their talks would continue over the course of the weekend. Many investors have been looking towards the U.S. dollar as a “safe-haven” investment tool based on the potential for trade tensions to hurt other economies around the globe.

Based on Friday’s numbers, many investors were holding onto USD. Reports indicated that the euro was down to $1.13626 or a third of a percent, and the dollar was holding up at 113.53 yen. Meanwhile, the Australian dollar (AUD) also slipped down to $0.7299, or a third of a percent. The currency had hit a three-month high this past Thursday.

Chinese Yuan

With the current United States and China tensions regarding the trade situation, strategists at Credit Suisse believe the Chinese yuan will be hit harder. They predict it could reach a decade low price of 7.20 per US dollar by the end of the year.
A CNN report on Saturday (Dec. 1) noted that Trump had plans to raise the tariff from 10 percent up to 25 percent on $200 billion worth of Chinese goods. However, the American President has also expressed optimism with regards to striking a deal with China’s president. It has sent mixed signals to investors and traders who now await to see what will transpire.
If President Trump stays consistent with his previously-announced plans to boost the 10 percent tariffs already levied on Chinese imports, it could further escalate the U.S.-China trade war situation. The president set a January 1 deadline to raise the tariffs on China’s goods, so this meeting could be a major boost or bust for the US and other economies.

Future expectations

The expectation is that any agreement that Trump and XI might create this weekend will need further details to be worked out. That would become the task of Cabinet officials, and it would need to be done in quick fashion ahead of the pending Jan. 1 deadline.
In addition to the big meeting in Buenos Aries, investors have also been weighing Federal Reserve chief Jerome Powell’s comments this past week. Many individuals are wondering if the U.S. central bank may be close to done with raising interest rates.
Time will tell if this is true or not, but interest rate futures traders have priced in only one rate hike for 2019, per the CME Group’s FedWatch Tool. That would be below the Fed’s projected number of three hikes for next year.