Investing.com – The U.S. dollar was higher against the safe haven Japanese yen on Tuesday amid hopes that the U.S. and China are getting closer to a preliminary agreement to resolve their protracted trade war, which has raised fears of a global economic slowdown.
The dollar rose 0.26% against the yen to 108.82 by 03:19 AM ET (08:19 GMT), building on Monday’s gains of 0.4%. The yuan, meanwhile, strengthened below 7 to the dollar for the first time in three months.
In recent days, Beijing and Washington have given encouraging signs of progress in trade talks.
Reuters reported that China is pushing U.S. President Donald Trump to remove more tariffs imposed in September as part of a “phase one” trade deal expected to be signed later this month at a yet-to-be determined location.
Both countries have slapped tariffs on each other’s goods in a trade war that has dragged on for 16 months.
“There may have been some expectations that the U.S. may postpone the remaining tariffs, which are due to kick in on Dec. 15. But if it goes further by rolling back existing tariffs, that would not only benefit the economy but would also make the truce seem more permanent,” said Yukino Yamada, senior strategist at Daiwa Securities.
The U.S. dollar index against a basket of six major currencies was steady at 97.32, holding just below the one-week highs of 97.47 reached overnight.
The Australian dollar was also higher, rising 0.43% to 0.6912 as investors became more comfortable with taking on risk.
Earlier Tuesday, the Reserve Bank of Australia left its cash rate at a record low of 0.75% and reiterated its concern about consumer spending. It said rates are likely to remain low for an extended period.
Many economists expect the RBA to cut rates at least once early next year to help revive inflation and a slowing economy.
–Reuters contributed to this report