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The dollar rose to a two-week high Monday after the United States and China agreed to resume trade negotiations and investors dumped safe-haven currencies such as the yen and the Swiss franc as tensions eased between the world's two largest economies.
Although there were reports that an agreement would be reached before US President Trump and Chinese President Xi Jinping met on the sidelines of the Group of 20 (G20) summit in Osaka, Japan, the results were more positive than investors expected.
Trump said he would suspend new tariffs and China would buy more agricultural products. He also proposed relaxing restrictions on technology companies Huawei.
However, market participants remained cautious because negotiations did not mean that an agreement was imminent.
"Uncertainty will continue," said Kevin Cummins, a senior U.S. analyst at NatWest Markets. "As we have seen before, negotiations with China broke down rapidly in May when they looked like an agreement was about to be reached. Even with trade agreements with Mexico and Canada, they threatened to impose tariffs on Mexico in June. Delays now do not necessarily mean that they will soon be. To reach a comprehensive trade agreement.
However, China's offshore renminbi rose more than 0.5% against the dollar to 6.8165 yuan, near a two-month high, before falling back to 6.8476 yuan after disappointing factory activity data were released.
The data showed that the manufacturing activity index released by the Institute for Supply Management (ISM) in June was 51.7, slightly higher than expected, and the dollar continued to rise.
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