By Rocky Swift
TOKYO (Reuters) -The euro gained on Monday following the announcement of a framework trade agreement between the United States and the European Union, the latest in a flurry of deals to avert a global trade war.
Meeting in Scotland on Sunday, U.S. President Donald Trump and European Commission President Ursula von der Leyen announced the deal, which will result in a 15% tariff on EU goods, half what Trump had threatened to impose from August 1.
Senior U.S. and Chinese negotiators are due to meet in Stockholm on Monday with an aim to extend a trade truce and prevent steep tariff hikes. Meanwhile, investor attention is shifting towards corporate earnings and central bank meetings in the U.S. and Japan.
“It could be a positive week, just purely from the fact that now we know the rules of the game, if you like,” said Rodrigo Catril, senior currency strategist at National Australia Bank.
“Now that there is more clarity, you would think that not only in the U.S., but around the globe, there will be a little bit more willingness to look at investment, to look at expansions, and to look at where the opportunities are,” he said on a NAB podcast.
The euro stood at $1.1763, up 0.2% so far in Asia. The common currency rose 0.2% to 173.78 yen.
Trump said the EU plans to invest some $600 billion in the U.S. and dramatically increase its purchases of American energy and military equipment. The pact is similar to one forged with Tokyo negotiators last week that will see Japan investing some $550 billion in the U.S. and a 15% tariff imposed on its cars and other imports.
The baseline 15% tariff will still be seen by many in Europe as too high, compared with Europe’s initial hopes to secure a zero-for-zero tariff deal.
China is facing an August 12 deadline to reach a durable trade pact with the U.S. No breakthrough is expected in the U.S. and China talks in Stockholm, but analysts said another 90-day extension of a trade truce struck in mid-May was likely.
The U.S. dollar advanced on Friday, bolstered by solid economic data that suggested the Federal Reserve could take its time in resuming interest rate cuts. Both the Fed and the Bank of Japan are expected to hold rates steady at this week’s policy meetings, but traders are focusing on the subsequent comments to gauge the timing of the next moves.
The dollar was little changed at 147.68 yen. The dollar index, which tracks the greenback against major peers, fell 0.1% to 97.534.
Sterling traded at $1.34385, down almost 0.1%. The Australian dollar fetched $0.6576, up 0.2%, while New Zealand’s kiwi dollar was flat at $0.6019.
(Reporting by Rocky Swift; Editing by Jacqueline Wong)
