Amos Simanungkalit | Jun 11, 2025 12:08AM ET
Currency markets remain calm amid easing export restrictions US dollar and Chinese yuan held firm on Wednesday after the United States and China reached a preliminary framework agreement aimed at easing long-standing tensions surrounding technology-related export controls.
The deal, while still in its early stages, is being interpreted as a cautious yet meaningful step forward in stabilizing bilateral trade relations.
The framework deal, announced jointly by officials from both nations, outlines an intent to improve transparency and cooperation on sensitive exports, particularly in areas involving advanced technology such as semiconductors, electric vehicles, and artificial intelligence.
Although the agreement lacks immediate legal enforceability, it has already begun to ease market nerves that had been heightened by fears of escalating trade restrictions.
Following the news, the US dollar index (DXY) was little changed, holding around the 105.00 level, suggesting that market participants are still digesting the broader implications of the agreement. Meanwhile, the offshore yuan (CNH) remained stable, trading near 7.25 per dollar, showing minimal reaction but maintaining a slightly firmer tone compared to the previous week.
Market analysts noted that both currencies are currently in a consolidation phase, reflecting an equilibrium between optimism over the trade announcement and caution regarding its long-term execution.
“While the agreement is a positive development, traders are reserving judgment until they see how it unfolds in practice,” said a senior FX analyst at a global investment firm. “There’s been too much volatility in US-China relations over the past few years for markets to react dramatically to early-stage commitments.”
Equity markets across Asia and the US saw modest gains, particularly in technology and manufacturing sectors with heavy exposure to cross-border supply chains. Investors are hopeful that a reduction in export curbs could revitalize trade volumes and reduce regulatory uncertainty for multinational firms.
Commodities and risk-sensitive currencies also saw muted but positive reactions. The Australian dollar, often seen as a barometer of China-related sentiment, edged slightly higher against the greenback. Bond markets, however, remained largely unmoved, as traders await more substantial economic data before repositioning portfolios.
In China, state media framed the agreement as a move toward “mutual respect and constructive engagement,” while US officials emphasized that the deal establishes a roadmap to prevent miscommunication and overreach in export control policies. Both sides agreed to establish working groups to address specific concerns and coordinate regulatory adjustments where possible.
Despite the upbeat tone, the macroeconomic backdrop remains a limiting factor for any major currency moves. In the US, recent data suggests a cooling labor market and softer inflation trends, prompting speculation that the Federal Reserve may pause rate hikes. Meanwhile, China's economy continues to face challenges such as sluggish domestic demand, deflationary pressures, and weak property sector performance.
These diverging economic dynamics may cap the potential for a strong directional trend in the dollar-yuan pair, at least in the near term.
"Even with easing trade tensions, both economies are wrestling with their own growth concerns," noted a senior economist at a leading global bank. “This keeps both currencies relatively anchored, with limited scope for aggressive appreciation or depreciation unless there is a surprise in monetary policy.”
Moving forward, the market’s focus will shift to the implementation of the framework agreement. Investors and policymakers alike will be monitoring whether the goodwill displayed in this initial announcement translates into concrete action. Any signs of backtracking or slow progress could quickly dampen the current cautious optimism.
Additionally, with the US election cycle approaching and ongoing geopolitical tensions in Asia-Pacific, the durability of the agreement remains in question. Markets will also be watching for clarity on specific export categories to be loosened or protected under the framework.
In the meantime, both the dollar and yuan are expected to trade within narrow ranges, supported by stabilizing sentiment but constrained by structural and political uncertainties.
Disclaimer: Derivative investments involve significant risks that may result in the loss of your invested capital. You are advised to carefully read and study the legality of the company, products, and trading rules before deciding to invest your money. Be responsible and accountable in your trading.
RISK WARNING IN TRADING: Transactions via margin involve leverage mechanisms, have high risks, and may not be suitable for all investors. THERE IS NO GUARANTEE OF PROFIT on your investment, so be cautious of those who promise profits in trading. It's recommended not to use funds if you're not ready to incur losses. Before deciding to trade, make sure you understand the risks involved and also consider your experience.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.