Early on Tuesday, the US dollar is strengthening against major peers over increasing hopes for the interim trade deal to be signed between the US and China soon. At the time of writing, the US dollar index DXY is trading at around 97.59, close to a one-week high.

The greenback has risen sharply against safe haven currencies like the Japanese yen and the Swiss franc as investors turned their attention towards riskier assets in expectations for a trade deal getting signed soon. According to recent reports, the US is also considering cancelling some tariffs on Chinese goods, which is another positive step towards resolving the trade dispute that has severely impacted the market sentiment for more than a year now.

According to a report on Bloomberg, China is also exploring alternate locations for the signing of the “Phase 1” trade deal after Chile cancelled the APEC summit in the wake of violent protests. The risk-on sentiment is back in global markets, causing equities to rally as US officials comment on progress in trade negotiations.

Last week, the US dollar had turned weaker after the Fed cut interest rates by 25bp for the third time in 2019. While markets had almost completely priced in this rate cut, the dollar declined as the Fed came out sounding less hawkish than expected about the possibility of future rate cuts.