The Chinese yuan moved higher against the U.S. dollar on Thursday in Asia following reports that Washington and Beijing started to outline a trade deal to end a seven-month long trade war.

Citing sources familiar with the negotiations, Reuters reported on Thursday in Asia that “the broad outline of what could make up a deal is beginning to emerge from the talks.” The move is the most significant progress yet toward ending the Sino-U.S. trade war, Reuters said.

The sources added that officials from both sides are drawing up six memorandums of understanding on structural issues such as forced technology transfer and non-tariff barriers to trade.

The news was cited as a tailwind for the Chinese yuan. The USD/CNY pair last traded at 6.6995 by 12:52 AM ET (05:52 GMT), down 0.3%.

The People’s Bank of China (PBOC) raised Yuan’s fixing by 338 pips to 6.7220 per USD vs the previous day’s fix of 6.7558.

Meanwhile, The AUD/USD pair traded 0.7% lower at 0.7109. The Aussie dollar rallied early in the session to a two-week peak of 0.7207 against the dollar on strong domestic January employment data.

The Australian currency quickly dipped later in the day after Westpac dropped a changed forecast for its Reserve Bank of Australia policy outlook.

The bank said it expects two rate cuts from the Bank, the first in August 2019 to be followed with another in November 2019.

Reserve Bank of Australia (RBA) Governor Philip Lowe had sent the Aussie tumbling early in February by stepping back from the central bank’s long-standing tightening bias, saying the next move in interest rates could be either down or up.

Elsewhere, the U.S. Dollar Index that tracks the greenback against a basket of other currencies was up 0.1% to 96.412.

Overnight, the minutes from the Federal Reserve strengthened expectations the central bank will leave interest rates on hold this year.

Federal Reserve policymakers expressed a willingness to end its balance sheet unwinding program later this year and keep rate hikes on hold to get a better sense of the health of U.S. economy and the extent of deteriorating global growth, minutes published Wednesday showed.

“Almost all participants thought that it would be desirable to announce before too long a plan to stop reducing the Federal Reserve’s asset holdings later this year,” the minutes showed.

The USD/JPY pair was little changed at 110.74.


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