Peso surges on US-Mexico deal, euro sags

Global stocks climb with bond yields on trade optimismFILE

Global stocks climb with bond yields on trade optimismFILE

US stock futures and Asian shares rose on Monday after the United States dropped its threat to impose tariffs on Mexico in a deal to combat illegal migration from Central America, and as weak U.S.jobs data raised hopes for USA interest rate cuts.

The U.S. -Mexico trade and migration deal also boosted emerging market stocks and sent U.S. government bond yields higher as investors favoured riskier assets.

Against a basket of six peers, the dollar rose 0.2 per cent to 96.716, recovering slightly after ending with a 1.2 per cent loss last week, its worst weekly performance since the week of February 16 a year ago.

China's yuan slipped to its weakest this year after the country's imports fell the most in almost three years and as talks to end the Sino-U.S. dispute remained deadlocked.

In Asia, Tokyo's Nikkei gained 1%, while MSCI's index of Asia-Pacific shares outside Japan rose as much as 1%, led by strong gains in Hong Kong and Indonesia.

"Still, with limited progress seen so far in U.S-China trade talks, the most important issue for markets, stock prices will be able to rise only so much", he added.

The figures showed imports in May dropped 8.5% from a year earlier, a much worse than expected outcome that signalled weak domestic consumption and weighed on the yuan.

China's exports unexpectedly returned to growth in May despite higher USA tariffs, data showed on Monday, but many suspected the rise was due to firms front-loading shipments to avoid higher US tariffs.

Still, the dollar's gains were checked by rising expectations the Federal Reserve will cut interest rates during the second half of the year.

Nonfarm payrolls increased by 75,000 jobs last month, much smaller than the 185,000 additions estimated by economists in a Reuters poll.

"I would expect optimism to rule markets until the next Fed's meeting", said Naoya Oshikubo, senior economist at Sumitomo Mitsui Trust Asset Management.

The yuan softened following China's weak May imports data, and after the country's central bank chief said last week there was no one specific "numerical number" that was more important than another when asked if there is a red line for Beijing.

Elsewhere in the currency market, the euro edged down 0.1 per cent to $1.1318, retreating from an 11-week high of $1.1348 touched on Friday.

Gold slipped nearly 1%, having hit a 14-month high of $1,348.1 per ounce on Friday, near a major resistance around $1,350. The yen gained in late May on the deteriorating global trade outlook as the currency tends to benefit during geopolitical or financial stress as Japan is the world's biggest creditor nation.

The onshore yuan fell as much as 0.35% to as low as 6.9366 per dollar, its weakest since early December, when Trump last met Chinese President Xi Jinping for trade talks. The offshore rate was slightly lower at 6.9488 yuan per dollar but held above Friday's low.

Group of 20 finance leaders said on Sunday that trade and geopolitical tensions have "intensified", raising risks to improving global growth, but they stopped short of calling for a resolution of the deepening U.S.

Oil prices edged lower on Monday in volatile trading as major producers Saudi Arabia and Russian Federation had yet to agree on extending an output-cutting deal and U.S.

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