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Dollar Displays Strength Against Major Currencies

The U.S. dollar exhibited strength on Monday, as trade tensions eased after the United States and Mexico reached an agreement following which the Trump administration dropped its plan to impose tariffs on goods imported from Mexico.

The move by the U.S. President to drop the plan to impose tariffs came after the two countries signed a deal that is expected to help stop the flow of migrants through Mexico and into the U.S.

The U.S. President tweeted, "I am pleased to inform you that The United States of America has reached a signed agreement with Mexico. The Tariffs scheduled to be implemented by the U.S. on Monday, against Mexico, are hereby indefinitely suspended."

He added, "Mexico, in turn, has agreed to take strong measures to stem the tide of Migration through Mexico, and to our Southern Border. This is being done to greatly reduce, or eliminate, Illegal Immigration coming from Mexico and into the United States."

AS per the deal, Mexico will take unprecedented steps to increase enforcement to curb irregular migration, including deploying 6,000 troops from its newly formed National Guard to its southern border.

The dollar index rose to a high of 96.94 around mid morning, but dropped to around 96.75 by late afternoon. However, it was still fairly high up from previous close, gaining about 0.2%.

Against the euro, the dollar gained about 0.15% at $1.1318 a unit of euro, after having weakened a bit to $1.1342 at the open.

The pound sterling was down 0.35% at $1.2693, after having gained marginally at $1.2748 earlier in the day.

Against the Japanese yen, the dollar rose to 108.71 before paring some gains as it eased to 108.46, still up by a fairly comfortable 0.25%.

The dollar was up marginally against the Canadian loonie with the pair trading at 1.3269. Against Swiss franc, the greenback was gaining nearly 0.2% at 0.9896.

Against the Aussie, the dollar gained nearly 0.6% with the AUD-USD pair hovering around 0.6960.

The Chinese yuan fell to 6.9589 a dollar, hitting its lowest so far in 2019. It however, recovered to 6.9441 later on in the session, wiping off its losses.

China's exports grew 1.1% in May, after falling 2.7% a month earlier, according to data released by the General Administration of Customs. Exports were expected to decline by 3.9%. On the other hand, imports decreased 8.5% annually, compared to the expected drop of 3.5%.

As a result, overall trade balance showed a surplus of $41.65 billion in May, much bigger than the forecast of $22.3 billion.

The Mexican currency Peso rose to a high of $19.1360, hitting its best level since late 2108, after the U.S. announced its decision to drop its plan to impose tariffs on imports from Mexico. It gave up some gains subsequently, but was still up sharply at $19.2210, a long way up from previous close of $19.6242.

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