Investing.com – The Chinese yuan and the Australian dollar gained on Wednesday in Asia following reports that Beijing and Washington may be making progress in resolving their trade dispute.
Talks between the two countries were extended for a third day, according to various media, which added that negotiators made progress on issues including the purchase of U.S. goods and services.
U.S. President Donald Trump is said to be eager to strike a deal with Beijing in an effort to help Wall Street recoup some of the steep losses suffered in recent months, CNBC reported citing people familiar with internal White House deliberations.
“Talks with China are going very well!” Trump tweeted on Tuesday.
The new round of talks began on Monday as Beijing and Washington hoped to reach an agreement before a March 1 deadline when U.S. tariffs on some $200 billion in Chinese goods would rise to 25% from 10%.
The news lifted investor sentiment and pushed the safe-haven yen lower. The pair was up 0.14% to 108.87 by 11:38 PM ET (04:38 GMT).
Meanwhile, the pair traded 0.3% higher to 0.7156 following the news. The Australian dollar is widely considered as a proxy for Chinese economic growth as China is the country’s biggest importer for its commodities.
The pair was down 0.2% to 6.8363. The People’s Bank of China (PBOC) set the yuan reference rate at 6.8526 vs Tuesday’s fix of 6.8402.
Despite today’s gain, some analysts still expect the yuan to breach the key 7-per-dollar mark within six months, according to a Reuters poll.
“Looking at the Chinese fundamentals, the economy is slowing and the central bank is easing monetary policy, with a lot of uncertainties over the next steps for the trade dispute between the U.S. and China,” said Erik Nelson, currency strategist at Wells Fargo (NYSE:).
“All these point to further weakness in the Chinese currency,” he added.
The Chinese currency lost about 6% in 2018, with escalating China-U.S. trade war cited as a major headwind.
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