Dollar and Yuan Holds Firm as U.S.-China Trade Talks Show Progress

The U.S. dollar and China’s yuan remained largely steady on Wednesday as American and Chinese negotiators concluded two days of trade talks in London.

While the discussions hinted at a softening of hostilities in the prolonged trade war between the world’s two largest economies, the outcome provided little clarity or detail, leaving financial markets treading cautiously.

Both countries’ officials announced a tentative framework that builds on last month’s Geneva truce. The agreement aims to lift China’s export restrictions on rare earth elements and magnets—critical to numerous global industries—while also easing some of the recent U.S. export controls targeting high-tech goods.

China’s Vice Commerce Minister Li Chenggang confirmed that the framework would now be reviewed by Presidents Xi Jinping and Donald Trump for final approval. While the agreement marks a diplomatic milestone, investors were left uncertain about its long-term impact on global trade dynamics and the broader economic outlook.

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“In normal conditions, this would be a textbook ‘sell the dollar’ moment—favorable for risk sentiment and global trade,” explained James Kniveton, senior corporate FX dealer at Convera. “But the dollar hasn’t been acting like a traditional safe haven lately, so we may see continued dollar buying and inflows into Wall Street.”

Despite recent rebounds in U.S. equities, investor sentiment remains fragile, shaken by months of economic volatility and unpredictability tied to Trump’s policy decisions. The dollar, reflecting this cautious sentiment, has declined more than 8% so far this year.

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On the day, the greenback edged slightly higher, pushing the euro down 0.08% to $1.1416 and settling at 145.05 against the yen. China’s onshore yuan traded flat at 7.1867 per dollar, while the offshore yuan hovered near the same level at 7.1875—both near two-week lows.

Meanwhile, the dollar index, which tracks the currency against six major peers, rose 0.17% to 99.129, underscoring a cautious but steady outlook in foreign exchange markets.

As investors await further developments and official endorsements from Washington and Beijing, the global economy continues to hang in the balance—watching closely for a definitive move from rhetoric to resolution.