The foreign exchange market was on hold Monday morning, with the U.S. dollar slightly lower in anticipation of further details on the U.S.-China trade agreement.
U.S. President Donald Trump's top trade negotiator, Robert Lighthizer, praised a "phase one" U.S.-China trade deal which is expected to nearly double U.S. exports to China over the next two years, while China remained cautious ahead of the signing of the agreement.
Speaking on Sunday, Lighthizer said there would be some routine "scrubs" to the text, but "this is totally done, absolutely."
The deal, announced on Friday after more than two and a half years of on-off negotiations between Washington and Beijing, will reduce some U.S. tariffs on Chinese goods in exchange for increased Chinese purchases of U.S. agricultural, manufactured and energy products by some $200 billion over the next two years.
But although China's trade delegation expressed optimism about the deal, some government officials are cautious. "(The deal) is a phased achievement, and does not mean that the trade dispute is settled once and for all," said a Reuters source in Beijing with knowledge of the situation.
Caution over the future path of trade talks pushed the dollar index down 0.13%, last at 97.04. The trade sensitive Chinese yuan and Australian dollar were both off last week's four-month peaks.
"FX investors took one look at the semi-conclusion of a "phase one" deal on Dec. 12 and were overjoyed, but came back to the table on Dec. 13 with the feeling of having more questions than real answers," said Stephen Gallo, European head of foreign exchange strategy at BMO Capital Markets.
The euro, which had spiked to a four-month high of $1.1199 against the dollar on Friday, retraced most of those gains, last at $1.1152, nevertheless up modestly over the course of Monday's trade. The yen, a safe-haven asset which benefits from market uncertainty, reached a two-week low on Friday before regaining some value to last trade at 109.50 yen per dollar.
The "U.S.-China phase one deal offers more in terms of negating some near-term downside risks facing the economy than it offers for a sharp rebound in domestic or global activity," said Gallo.
"Importantly, our prior expectations for faster growth rates in infrastructure investment do not seem to be coming to fruition yet."
Elsewhere, sterling remained bolstered by expectations that last week's resounding election win for British Prime Boris Johnson's Conservative Party will end near-term Brexit uncertainty. The pound was last trading at $1.335, 0.21% firmer on the day.