U.S. President Donald Trump (R) and Chinese Vice Premier Liu He talk to reporters in the Oval Office at the White House April 04, 2019 in Washington, DC.

Chip Somodevilla | Getty Images

A Chinese clerk counts renminbi yuan banknotes at a bank in China on December 2015.

Jie Zhao | Corbis News | Getty Images

“I think it’s been on a real streak,” said Marc Chandler, chief market strategist at Bannockburn Global Forex. “It’s at a five month high. It caught a lot of people by surprise. A lot of people were arguing China was letting its currency weaken to offset the tariffs.”

Strategists say the move higher has been due to optimism over China and the global economy now that the trade deal is about to be approved. Emerging market currencies have been moving higher, including the Mexican peso, the Brazilian real, and the Indian rupee.

China’s currency is at the highest level to the dollar since Aug. 1. The onshore currency, which trades in China, was at 6.8792. The offshore currency, which trades in Hong Kong and is more impacted by international traders, was at 6.8792 to the dollar, its highest level since July 29.

The phase one deal means no new tariffs will be put in place and some of the existing ones will be reduced. The deal is expected to be signed in Washington Wednesday.

Democrats immediately attacked the decision, which Senate Minority Leader Sen. Chuck Schumer of New York claiming China is a manipulator.

“Unfortunately, President Trump would rather cave to President Xi than stay tough on China,” he said. “When it comes to the president’s stance on China, Americans are getting a lot of show and very little results.”

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Chandler said strong industrial production and strong retail sales for Germany were helping drive bund yields higher. The German 10-year was at minus 0.16 percent. Chandler said it appears the economy is bottoming.

“The idea is the Chinese economy is going to free up and do well,” said Andrew Brenner of National Alliance. “7% of German exports go into China. We’re starting to see things happen in the bond market.”

He said most investors don’t follow the relationship between the German bund and yuan. He added that could influence the U.S. market and drive the 10-year yield higher.

“The stronger the outlook for the Chinese economy, the weaker Bunds prices (higher yields),” he said. “Why? Because 7%+ of German exports are to China, so as the outlook for China improves, as it is with the expected signing of Phase 1 on Wednesday, the worse for Bund prices.”

Chandler said the China deal is helping other currencies. Emerging markets have “been strong this year coming out of the box, partly because of risk-on. You have Brexit and you have the China deal,” he said.