Forex News
United States (US) Treasury Secretary Scott Bessent said during the European trading session on Thursday regarding the outcome of the meeting between President Donald Trump and Chinese leader Xi Jinping that both nations are trying to balance trade out.
Additional remarks
US has a stronger position because of our trade deficit with China.
Will also discuss board of investments, that will cover non-strategic and non-sensitive areas where China can invest.
Think we're going to see large Boeing orders.
Also talked about China buying more energy today.
Thinks China will do what it can on the Strait of Hormuz.
The reopening of the strait benefits China.
Believes that China will work behind the scenes to the best of their capabilities.
FX Implications
The US Dollar Index (DXY) and S&P 500 futures remain broadly calm despite positive commentary from US Treasury Secretary Bessent on the Trump-Xi meeting outcome.
United States (US) President Donald Trump said at a state banquet in Beijing that he had extremely positive and constructive discussions with Chinese leader Xi Jinping, while calling him a “friend”.
Additional remarks
US-China relationship is one of the most consequential in world history.
This is a historic visit.
Had extremely positive and constructive discussions with Xi.
Meanwhile, China's Xi has also praised US President Trump at the state banquet and has stated that both the US and China should become partners, not rivals.
Additional comments
Rejuvenation of China and 'Make America Great Again' can go hand in hand.
I had in-depth exchange of views with Trump today.
We both believe China-US ties are the most important bilateral ties in the world.
Mutual respect is key to stable China-US ties.
We should jointly promote great ship of China-US relations along the right path.
Market reaction
No responsive action was seen in the US Dollar (USD) and S&P 500 futures after comments from US President Trump and Chinese leader Xi, following their bilateral meeting.
US-China Trade War FAQs
Generally speaking, a trade war is an economic conflict between two or more countries due to extreme protectionism on one end. It implies the creation of trade barriers, such as tariffs, which result in counter-barriers, escalating import costs, and hence the cost of living.
An economic conflict between the United States (US) and China began early in 2018, when President Donald Trump set trade barriers on China, claiming unfair commercial practices and intellectual property theft from the Asian giant. China took retaliatory action, imposing tariffs on multiple US goods, such as automobiles and soybeans. Tensions escalated until the two countries signed the US-China Phase One trade deal in January 2020. The agreement required structural reforms and other changes to China’s economic and trade regime and pretended to restore stability and trust between the two nations. However, the Coronavirus pandemic took the focus out of the conflict. Yet, it is worth mentioning that President Joe Biden, who took office after Trump, kept tariffs in place and even added some additional levies.
The return of Donald Trump to the White House as the 47th US President has sparked a fresh wave of tensions between the two countries. During the 2024 election campaign, Trump pledged to impose 60% tariffs on China once he returned to office, which he did on January 20, 2025. With Trump back, the US-China trade war is meant to resume where it was left, with tit-for-tat policies affecting the global economic landscape amid disruptions in global supply chains, resulting in a reduction in spending, particularly investment, and directly feeding into the Consumer Price Index inflation.
- Gold is hovering around $4,700, with no clear bias, as investors await news from the summit between Trump and Xi in Beijing.
- Trump said that the first meeting with Xi, held earlier on Thursday, was "great".
- Concerns about the fragility of Iran's ceasefire and rising hopes of Fed hikes are weighing on precious metals.
Gold (XAU/USD) is trading flat on a particularly calm market session on Thursday, with investors awaiting developments from a two-day summit between US President Donald Trump and his Chinese counterpart, Xi Jinping, in Beijing.
Safe-haven flows triggered by the uncertainty about the ceasefire in Iran and higher US Treasury yields, following hot US inflation figures earlier in the week, are providing support to the Greenback. Still, traders are reluctant to take decisive positions ahead of the outcome of the high-stakes summit in China.
Trump affirmed that the first meeting with Xi was “great” after two hours of talks held earlier on Thursday. Reports by Reuters, citing White House sources, say that both leaders agreed on the need to reopen the Strait of Hormuz, whose closure has boosted Oil prices by more than 40%. The same source also affirmed that the status of Taiwan, considered the most controversial issue on the agenda, was not mentioned at the meeting.
Technical Analysis: Sideways consolidation around $4,700
XAU/USD keeps consolidating without a clear bias after last week's recovery from the after $4,500 area. The 4-hour Relative Strength Index (RSI) is hovering around the 50 line, hinting at a neutral tone, while the Moving Average Convergence Divergence (MACD) remains in negative territory but contracting, which suggests easing downside momentum.
Immediate support remains at the weekly floor at around the $4,640 level, which is holding bears for now. A confirmation below here would lure sellers into a retest of the $4,500 level. Further down, the March 26 low near the $4,350 area comes next.
On the topside, Monday's high around $4,750 is expected to challenge bulls, ahead of the mid-April highs in the area of $4,880. If that level is broken, the March 17 high, near $5,040, will appear on the horizon.
(The technical analysis of this story was written with the help of an AI tool.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Brown Brothers Harriman’s (BBH) Elias Haddad notes the Dollar index (DXY) is consolidating near its 200-day moving average and is expected to stay within the 96.00-100.00 range. The firm highlights a supportive US macro backdrop for USD, but warns that rising Treasury yields and strained fiscal credibility pose a headwind. Markets fully price one 25bps Fed hike over the next year.
Dollar supported but capped by fiscal strain
"The dollar index (DXY) is consolidating recent gains near resistance at its 200-day moving average. The US macro backdrop (high inflation, stable labor demand) argues for the Fed to stay restrictive for longer which is USD supportive. The swaps curve virtually fully prices a 25bps Fed funds rate hike in the next 12 months."
"In parallel, US fiscal credibility is increasingly under strain as 10-year Treasury yields move closer to the roughly 5.3% pace of nominal GDP growth seen over the past decade. That narrows the buffer between growth and borrowing costs, raising concerns about debt sustainability and acting as an important headwind for USD."
"We expect DXY to remain anchored within its 96.00-100.00 range that’s held for nearly a year."
"US consumer spending has been resilient so far, contributing to half the 2% annualized real GDP growth over Q1. Going forward, the Atlanta Fed GDPNow model estimates annualized real GDP growth of 3.7% in Q2, and real personal consumption expenditure at 1.8% vs. 1.6% in Q1."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
TD Securities strategists note the Bank of Canada’s (BoC) April Summary of Deliberations balanced US trade risks with inflation concerns. While the Bank acknowledged improved sentiment and resilience to USMCA (United States-Mexico-Canada Agreement) uncertainty, it highlighted upside risks to inflation and potential loosening of expectations. They interpret this as a mildly hawkish message and expects the Bank to hold rates through 2026, with hikes starting in 27Q1.
BoC seen on extended policy hold
"The Bank of Canada's Summary of Deliberations from April dug into both sides of their recent guidance, with the minutes noting that the Bank "needed to prepare for adverse outcomes" on US trade talks, while at the same time cautioning the inflation backdrop could change quickly and "monetary policy might need to respond to guard against the risk that inflation broadens and becomes more persistent"."
"Reading through the rest of the document, the Bank did undercut its focus on USMCA risks by noting improved sentiment in the Q1 BOS and ongoing resilience to trade uncertainty."
"The Bank also struck a more alarmed tone on potential loosening of inflation expectations, noting these can shift more quickly after the pandemic experience."
"The end result was a mildly hawkish message with more emphasis on upside risks to inflation and a more cursory acknowledgment of ongoing risks from USMCA renewal."
"We look for the Bank to stay on hold on through 2026 with rate hikes in 27Q1."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
The European Central Bank Governing Council member Martins Kazaks said in a presentation during an event on Thursday, the central bank will continue to decide meeting by meeting and on the basis of incoming data.
Additional takeaways
No immediate policy action in April does not imply a looking-through approach to current inflation episode.
Stagflation is not part of the current baseline.
Inflation likely to remain elevated for some time, even if the Middle East conflict were to be resolved quickly.
The longer the shock persists, the greater the risks of second round effects and inflation expectations climbing up.
Preserving anchored inflation expectations is the immediate priority for monetary policy
Large and persistent inflation deviations would not be tolerated under the ECB’s monetary policy strategy.
We are moving away from the March 2026 baseline.
Financial-market inflation expectations remain broadly anchored.
Financial markets have tightened financing conditions, supporting policy transmission, but for sustained effect this needs to be reinforced by monetary policy.
Underlying inflation indicators are stable so far despite external price shocks, while the ECB wage tracker pointed to slower wage growth ahead.
Fiscal policy remains a possible source of additional inflation pressure.
Over time, weaker growth could require policy to move in the other direction if it intensified downward pressure on medium-term inflation.
Market reaction
At the time of writing, EUR/USD is largely flattish on the day, still defending the 1.1700 level.
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
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