The dollar rises, benefiting from optimism regarding a Chinese-American agreement

The dollar rose today, recovering from the lowest level in a week against other major currencies, amid indications that the United States and China are on their way to signing an agreement that would temporarily stop tough US tariffs and restrictions imposed by China on its exports of rare earth metals.

US President Donald Trump said in a speech in South Korea, where he is scheduled to meet his Chinese counterpart Xi Jinping tomorrow, Thursday, that he believes they will conclude a “wonderful agreement” for both sides, while sources told Reuters that the Chinese state-owned company COFCO bought three shipments of American soybeans this week in another indication that heralds reaching an agreement.

Bart Wakabayashi, Tokyo branch manager on State Street, said the dollar’s strength “may be a relief from Trump’s tariff fest.”

Currency dealers are also closely awaiting the decisions of central banks, especially the Federal Reserve (the US central bank), which is widely expected to cut interest rates at its meeting that concludes later today.

The European Central Bank and the Bank of Japan are expected to keep interest rates unchanged tomorrow, Thursday.

The Australian dollar reversed losses and rose 0.3 percent to $0.6606 after quarterly consumer price data cast doubt on an interest rate cut from the Reserve Bank of Australia next week or even at the next meeting in December.

The dollar index, which measures the performance of the US currency against six competing currencies, rose 0.2 percent to 98.899 after two consecutive days of declines that brought it to its lowest level since October 21 at 98.562 yesterday, Tuesday.

The euro fell 0.2 percent to $1.1631. The British pound fell 0.3 percent to $1.3238.

The dollar rose against the Japanese currency 0.1 percent to 152.275 yen.