A truce in the U.S.-China trade war boosted global stocks to their highest in roughly three weeks yesterday, causing a dollar sell-off and pushing the Chinese yuan and several trade-dependent currencies higher. The rally in equities follows an agreement reached between Washington and Beijing at the G20 summit on Saturday.
U.S. Treasury yields rose after the trade deal, but they reversed course as risk appetite faded and investors bought safe-haven U.S. debt.
Australian Dollar weakened overnight as the Aussie is a crucial component to the risk rally following the Sino/US cease-fire; although the stipulation is US dollar repatriation and higher interest rates as stocks recover and bonds fall. The Australian dollar was marginally higher in Asian trade. The Reserve Bank of Australia hold its policy meeting later on tonight at which it is expected to keep interest rates on hold.
Closer to home, the Kiwi moved lightly but has remained on the same level since yesterday. The temporary pause in that the trade war has put a strong bid under the risky assets.