The U.S. dollar and Chinese yuan remained largely unchanged on Wednesday following the conclusion of trade negotiations in London. While both nations hinted at progress, the lack of concrete detail left currency markets cautious.

Trade Framework Agreed, But Market Reaction Muted

Officials from both sides agreed on a framework to resolve China's rare earth export restrictions and to ease select U.S. tech export curbs, mirroring a Geneva truce last month. However, next steps depend on approval from President Biden and President Xi, limiting immediate impact.

China's Vice Commerce Minister Li Chenggang emphasized that the framework must now be reviewed at the head-of-state level.

Dollar Behavior Defies Convention

"On traditional metrics, this would be a ‘sell the dollar' moment," said James Kniveton of Convera. Improving trade relations and global risk appetite would usually weaken the dollar. But recent trends suggest otherwise.

Instead, investors may continue to buy dollars and rotate into U.S. equities, given the dollar's shift away from safe-haven behavior in 2025.

FX Market Snapshot

• Euro: Down 0.08% to $1.1416

• Yen: Dollar steady at 145.05

• Onshore Yuan: Flat at 7.1867

• Offshore Yuan: Slightly weaker at 7.1875, near two-week lows

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