US dollar stabilizes amid ongoing trade talks with China
The US dollar stabilized on Tuesday as Beijing and Washington negotiate on trade for the second day in London, boosting hopes, while sterling fell after weak UK labor data.
High-level talks between US and Chinese officials commenced this week in London, with the hopes of reaching some sort of an initial agreement on tariffs and trade.
It comes after the Trump-Xi phone call which was described as “very positive” and paved the way for deeper communication.
Trump adviser Kevin Hassett said that reducing US chip exports restrictions could be discussed, and in return, China would accelerate shipments of rare-earth minerals.
Dollar’s Performance
The dollar index rose 0.1% against a basket of major rivals to 98.989, hovering near a six-week trough at 98.351.
The index fell 8.7% since the start of the year amid concerns among investors about the impact of tariffs on the US economy.
The euro stabilized at $1.1423, while sterling edged down 0.1% to $0.6513.
Sterling lost ground after weak UK jobs data, boosting the odds of future Bank of England rate cuts.
UK wages rose 5.2% in the three months ending April, below estimates, sending the pound down 0.4% against the dollar to $1.13488.
The BOE will convene next week and is still expected to maintain interest rates unchanged, with traders expecting 48 basis points of rate cuts overall by the end of the year.
Japan to Maintain Rates
The Bank of Japan is also widely expected to maintain interest rates unchanged at next week’s meeting, with the governor Kazuo Ueda noting that the timing of the next rate hike might be delayed.
Ueda said ahead of the Parliament that the bank remains committed to policy normalization and rate hikes as long as inflation remains near the 2% target.
Yen has settled at 144.50 after surging 8.5% against the US dollar this year, boosted by haven demand after Trump’s tariffs.
Now investors await the crucial US consumer prices report for May, which will impact the future path of Fed’s interest rates this year.
Silver backs off 13-year peak on profit-taking
Silver prices fell in European trade on Tuesday for the first time in four days, backing away from 13-year highs on profit-taking, under pressure from the stronger dollar.
The decline comes after signals about progress in the US-China trade talks in London, which entered its second day.
Prices
Silver prices fell 1.2% today to $36.31 an ounce, with a session-high at $36.83.
On Monday, silver rose 2.2%, the third profit in a row, scaling a 13-year peak at $36.89.
A Surge
Silver prices rallied over 10% in June so far on strong industrial demand on the white metal, and improving retail demand as well, as silver remains far undervalued compared to the record-breakin gold.
US Dollar
The US dollar rose 0.4% on Tuesday and approached a one-week high against a basket of major rivals at 99.39.
It comes amid concerns about an economic slowdown in the US and China receded with both sides conducting important talks in London for a second day.
Gold declines as US-China trade talks progress
Gold prices fell in European trade on Tuesday, resuming losses and approaching a week low once more under pressure from the stronger US dollar.
The decline comes after signals about progress in the US-China trade talks in London, which entered its second day.
Now the markets await crucial US inflation data for May to gather clues about the odds of Fed rate cuts later this year.
Prices
Gold prices fell 0.7% to $3302 an ounce, with a session-high at $3333.
On Monday, the precious metal rose 0.45%, the first profit in three days away from a week low at $3293.
US Dollar
The US dollar rose 0.25% on Tuesday and approached a two-week high against a basket of major rivals.
It comes amid concerns about an economic slowdown in the US and China receded with both sides conducting important talks in London for a second day.
Trade Talks
High-level talks between US and Chinese officials commenced this week in London, with the hopes of reaching some sort of an initial agreement on tariffs and trade.
It comes after the Trump-Xi phone call which was described as “very positive” and paved the way for deeper communication.
Trump adviser Kevin Hassett said that reducing US chip exports restrictions could be discussed, and in return, China would accelerate shipments of rare-earth minerals.
According to the Wall Street Journal, Trump allowed his chief negotiator, Treasury Secretary Scott Bessent to set limits on tech sales and readjust export restrictions.
US Rates
According to the Fedwatch tool, the odds of a 0.25% Fed June rate cut stood at just 1%, and at 17% for a July rate cut.
According to the London Securities Exchange data, traders now expect 50 basis points of US interest rate cuts overall this year, likely starting in October.
SPDR
Gold holdings at the SPDR Gold Trust rose 2.01 tons yesterday to a total of 936.22 tons, the highest since 13.
