AP Photo/Alex Brandon
- US-China trade tensions have simmered down after talks in Washington last week.
- The dollar hit a five-month high Monday morning, rising to 93.87 on the US dollar index.
- Follow the US dollar index here.
The US dollar surged to a fresh five-month high Monday morning amid a wind-down of US-China trade tensions and as markets poise for faster growth.
The currency rose as high as 94.06 on the US dollar index, which measures the dollar against its major peers. The greenback has rallied in recent months, gaining about 5% since mid-February.
After high-stakes talks in Washington last week, Beijing agreed to “substantially” reduce the US-China trade deficit. US Treasury Secretary Steven Mnuchin said the Trump administration is “putting a trade war on hold.” The concession raises expectations for faster US growth and a more aggressive Federal Reserve.
The rising dollar “reflects economic leadership shifting back towards the US,” according to a team at Citi Research led by chief global equity strategist Robert Buckland.
Still, they aren’t convinced the dollar rally is “sustainable,” noting that expanding twin fiscal and current account deficits could drag the dollar back down as soon as 2019.
Citi Research expects the dollar to shed about 5% versus other major currencies over the next 12 months.
Markets Insider
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