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The dollar strengthened on Thursday as concerns about the current trade war were alleviated by the news that Washington and Beijing were discussing the resumption of negotiations in September.
A spokesman for China's Ministry of Commerce said Thursday that the world's two largest economies are negotiating on the next round of face-to-face talks, but progress depends on whether Washington can create favorable conditions. He also expressed the hope that the United States would eliminate the additional tariffs that would come into effect on September 1.
Buying of risky assets depressed safe-haven currencies such as the yen JPY = and the Swiss Franc CHF = and yields on U.S. Treasuries rose. Despite the sharp escalation of the tariff war last week, the dollar index remained stable, rising 0.28% to 98.488 in late trading.
The dollar rose 0.23% against the euro to $1.1053, near a one-month high.
U.S. President Trump said last Friday that he would impose a 5% tariff on some $550 billion of target Chinese goods. Hours earlier, China announced new tariffs on $75 billion worth of U.S. goods. So far, China has not indicated retaliation against Trump's new tariffs.
"It seems that the two sides are moving towards quietly dealing with the lack of consensus rather than the Twitter war, which is enough to stabilize emerging market currencies, as well as commodity currencies such as the Canadian dollar and the Australian dollar," said Gregory Anderson, global head of foreign exchange strategy at BMO Capital Markets.
The yen fell 0.49% to 106.63 yen against the dollar, but is expected to appreciate by 2% against the dollar in August.
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