Global Markets Ride the Wave of U.S.-China Trade Optimism

Currency markets saw subdued activity with the U.S. dollar weakening against major counterparts due to optimism over a U.S.-China trade agreement. Other factors like central bank meetings and shifts in inflation and currency strategies across nations shaped market dynamics. Investors also eyed ongoing disruptions caused by the U.S. government shutdown.

The dollar experienced a decline against the euro, Chinese yuan, and Australian dollar on Monday as optimism over a potential U.S.-China trade deal bolstered investor risk appetite, leading to reduced demand for the greenback. Currency market movements were muted as traders anticipated pivotal central bank meetings this week.

President Trump announced that the U.S. and China poised to finalize a trade deal, with an expected meeting between Trump and Chinese President Xi Jinping in South Korea adding to market enthusiasm. According to Marc Chandler, chief market strategist at Bannockburn Global Forex, global markets exhibited strong gains while gold saw a downturn.

Central banks are likely to drive market direction as the Federal Reserve and Bank of Canada are set to lower rates, while the European Central Bank and Bank of Japan might maintain current rates. Investors are also monitoring the U.S. federal government shutdown's impact, with disrupted air travel indicating broader economic implications.

(With inputs from agencies.)