FOREX-Dollar jumps on Sino-US deal on trade

By Medha Singh and Rocky Swift

May 12 (Reuters) - The dollar surged on Monday as investors cheered a Sino-U.S. deal that would slash reciprocal tariffs during a 90-day hiatus, easing fears of a damaging trade war between the world's two biggest economies.

U.S. Treasury Secretary Scott Bessent told reporters the two sides had reached a deal for a 90-day pause on trade measures following negotiations with Chinese officials in Geneva over the weekend.

The greenback climbed against safe-haven currencies, rising 1.7% to 147.835 yen JPY= and 1.5% to 0.84405 Swiss francs CHF=D3.

The dollar, U.S. Treasuries and equities have taken a beating since U.S. President Donald Trump's often chaotic roll out of sweeping tariffs last month shook confidence in American assets.

"The dollar was lagging other markets in the recovery from the April lows. Now the conditions are falling into place for a deeper adjustment and a bigger recovery of the dollar to catch up with equities and bond yields," said Kenneth Broux, senior strategist FX and rates at Societe Generale in London.

The dollar index =USD was at a one-month high. The gauge is still down 2.5% from the April 2 announcement of Trump's "Liberation Day" global tariffs.

The focus will also be on U.S. consumer price index (CPI) figures on Tuesday, for indications of how the trade spat has impacted the economy, and expectations for further rate cuts by the U.S. Federal Reserve.

In addition to U.S. inflation data for last month, April retail sales due on Thursday will also provide the latest pulse on consumer spending.

China's yuan CNY=CFXS rose to its highest since November 11 at 7.2001 yuan per dollar.

"If even China can make a deal, then other Asian countries like Japan, India, and SEA countries could follow and progress their own trade talks," said Jason Chan, senior investment strategist at Bank of East Asia.

The euro slumped 1.3% against the dollar to $1.1109 EUR=, while sterling traded at $1.3175 GBP=D4, down 1.1%.

Geopolitical tensions also appeared to ease over the weekend.

India and Pakistan announced a ceasefire over the weekend following the four days of fighting between the nuclear powers that had rattled markets. And Ukrainian President Volodymyr Zelenskiy said he was ready to meet Russian leader Vladimir Putin in Turkey on Thursday for direct talks, the first since the early months of the 2022 invasion.