U.S dollar is trading higher as Investors are watching cautiously a summit between China’s president Xi Jinping and U.S president Donald Trump. In Past Donald Trump had mentioned that his two days meeting with China counterpart would be very difficult. In past Donald Trump has accused China on several occasion of keeping its currency under value to gain unfair trade advantage over the United States.
Today and tomorrow meetings between both leaders will open a new dialogue, but market is anticipating that the likelihood of significant breakthrough seems low. In offshore trading dollar rose 0.1% against the Yuan.
Market is also waiting U.S labor department Jobs report due to release later today. A strong boost would strengthen the Fed’s case for raising interest rates again soon. Yester ADP data shows the labor market continues to strengthen. As a report on private sector employment came well above expectations. Last week job data showed the number of Americans applying for new unemployment benefits fell last week.
Higher interest rates typically make U.S assets more attractive to investors and help boost the dollar. Market is anticipating that there are 71% chances that Fed would increase the interest rate in its June meeting.
Dollar rallied to its 14 year high after U.S presidential election after Trumps expected plans of tax cuts and fiscal stimulus. Earlier in present weeks, Reuters reported that the Trumps promised Tax overhauling would take longer than the health care overhaul would.
News of a U.S Strikes against Syria increased the geopolitical uncertainity in the Middle East, after the news Yen surged against U.S dollar and other major currencies in today’s trading.
U.S launched missiles against the Syrian army and air base in response of alleged chemical weapons attack in the country in this week. The news shocked the market whose participants were waiting for the major breakthrough of the day to come from China – USA meeting. The tough diplomatic stance shown by the U.S had increased caution among investors. U.S strike on Syria added another layer of uncertainity to the outcome of meeting between two leaders, with tension already mounting over China’s trade policies and North Korea.