US-China Trade Thaw: A New Framework Unfolds Amid Global Currency Fluctuations

The dollar and China's yuan remained stable as U.S.-China trade talks in London indicated possible relief in their trade conflicts, though details were sparse. Officials established a framework to resolve issues such as China's restrictions on rare earth exports, promising to report back to their leaders.

Despite promising trade developments, the dollar's firmness contrasted with usual patterns, reflecting investor caution amid unpredictable U.S. policies. Analysts noted any new tariffs might be heavier than past ones, adding to economic uncertainty. A federal ruling kept Trump's tariffs intact, pending further legal review.

Traders eyeing the UK were focused on British finance decisions affecting public spending and investment. Meanwhile, a U.S. inflation report could steer the Fed's strategy, with the market expecting steady interest rates. A $39 billion Treasury bond auction may gauge bond market sentiment as fiscal debates ensue.

(With inputs from agencies.)