The euro strengthened to a 4 month high, and European bond spreads narrowed as regional leaders made progress in negotiating a historic stimulus package for economies devastated by the Covid-19 pandemic.
The Chinese yuan will hold on to its recent gains against the US dollar, and likely make a modest push forward from current levels over the coming year, as optimism about a China-U.S. trade deal offsets anxiety over weak domestic economic growth, a poll showed.
On Tuesday stocks in Asia traded higher with the biggest advance seen in Japan after the yen weakened. The dollar held gains and 10-year Treasuries were steady. Despite a rise in Tokyo as traders returned from a holiday, markets remained hostage to the next crucial round of trade talks. Equities ticked higher in Sydney and Seoul, while futures pointed to a weaker start in China and Hong Kong.
Yuan of China will breach the 7 per dollar rate within the next six months, according to about 60 percent of FX strategists, who also said authorities would continue to exert control over the currency in 2019.
Russia and China are drafting a pact to boost the use of their national currencies in bilateral and international trade, underscoring their intent to cut their reliance on the US dollar.