US dollar strengthens on China-US deal optimism

The dollar rose from a one-week low versus major peers on Wednesday on signs that the United States and China are on track to sign a deal that would pause tougher U.S. tariffs and China's rare-earth export curbs.

U.S. President Donald Trump said in a speech in South Korea, where he is scheduled to meet Chinese counterpart Xi Jinping on Thursday, that he thought they would get a "great deal" done for both sides, while sources told Reuters that China's state-owned COFCO bought three U.S. soybean cargoes this week in another sign of denouement.

The dollar's strength "may be some kind of relief from the Trump tariff festival," said Bart Wakabayashi, Tokyo branch manager at State Street.

"The dollar has been sold quite a bit for an extended period of time, so I do think there's more of a market mechanism that at some point it's going to rebound, and it can be overly reactive."

Currency traders are also keeping a close eye on central banks, particularly the U.S. Federal Reserve, which is widely expected to cut interest rates later in the day.

Both the European Central Bank and the Bank of Japan are expected to hold rates steady on Thursday.

Reuters