Dollar and stocks head for 3rd straight weekly win as US-China trade deal hopes rise

The dollar and U.S. stock market are grinding toward their third straight weekly win, thanks to rising talk that the U.S. and China might actually return to the table for trade talks.

Early Friday, Asian markets caught fire. The Australian dollar rose hard, up 0.5% to $0.6412. New Zealand’s kiwi moved too, gaining 0.4% to $0.5932. Both are risk currencies that bounce with China news, and both jumped after the offshore yuan surged to 7.2519 against the dollar, its strongest level since April 4.

Traders are reacting to fresh signs that the two global powers may resume negotiations. A late Thursday broadcast from Chinese state media was read as a green light from Beijing.

Then Marco Rubio, the U.S. Secretary of State, told Fox News, “Talks with China will come up soon.” These hints landed after weeks of volatility triggered by President Donald Trump’s tariffs, which gutted market confidence and sent asset prices flying in all directions.

Yuan climbs, yen tanks, dollar keeps going

Alvin Tan, a currency analyst in Singapore, reportedly said:“The dollar was hit so badly in the immediate aftermath of the tariffs, so now in the broad picture there’s a normalisation in the market. The market is keeping one eye on the economic situation, but the other eye is looking for positive developments in China.”

That’s where the optimism is coming from, less about what’s happening, more about what could. The greenback still looks solid for the week. It fell 0.2% on Friday, but is still headed for a 0.3% weekly gain. The dollar index stayed strong, even as trade volume thinned out due to holidays.

Against the yen, the dollar climbed to 145.91—the highest since April 10—before pulling back to 145.17. Japan’s central bank stayed frozen on rates and slashed growth forecasts, blaming uncertainty from U.S. trade policy.

That move hit the yen, which crumbled Thursday. It also suggested Tokyo won’t hike rates again anytime soon until it sees where all this U.S.-China drama lands.

Meanwhile, China’s markets stayed shut for a long holiday, but the currency moves elsewhere made it clear where sentiment is headed. Investors are ready to chase risk again, as long as Washington and Beijing stop threatening to blow up trade every other day.

Wall Street jumps on trade buzz, tech earnings

On Thursday night, S&P 500 futures rose 0.68% after China said it’s weighing trade talks. The Dow futures popped 0.82%, up 337 points. Nasdaq 100 futures rose 0.32%. Markets took the comments as a break from weeks of stress over tariffs, recession talk, and tech weakness.

U.S. shares also moved during the day session. The Nasdaq Composite surged 1.5%, erasing all its losses since April 2, the same day Trump started the mess with his “reciprocal” tariffs comment. The S&P 500 gained 0.6%, and the Dow added 0.2%. Both indexes are on an eight-day winning streak. The rally has been helped by a tech sector that’s trying to shake off shaky earnings.

That shake-up continued on Thursday. Apple sank 4% in after-hours trading after it missed expectations for revenue from its Services division. It also warned it’s bracing for $900 million in extra costs this quarter, tied to—you guessed it—tariffs.

Amazon dropped 2% after putting out weak guidance and blaming “tariffs and trade policies” for the miss. Both firms are part of the so-called “Magnificent Seven,” and their results added more fuel to the tariff fire.

Still, not all the earnings news was trash. About two-thirds of S&P 500 companies have reported so far, and 76% have beat earnings forecasts, according to FactSet. That stat helped carry stocks up earlier in the week. Results from Meta and Microsoft in particular gave bulls some energy, and traders went back to betting on AI again.

On the economic side, a manufacturing report landed better than feared. It still showed contraction, but the data was less ugly than expected. That helped put a floor under stocks and pushed Treasury yields up slightly. Add in the weaker yen and stronger yuan, and it was enough to get people buying again.