Ahead of the FOMC meeting, the US dollar is trading steady against most of its peers even as markets brace for the next round of tariffs to hit Chinese imports worth $156 billion over the weekend. At the time of writing, the US dollar index DXY is trading at around 97.63.

With the Federal Reserve widely expected to hold interest rates steady at the upcoming policy meeting and for some time to come, the focus remains squarely on the US-China trade war and when the phase one deal will be ready for signing. Last week, White House Chief Economic Adviser Larry Kudlow maintained that the next tariff hikes scheduled for December 15 are still on course until China is ready to reach a deal with the US by then.

Since then, we’ve heard some promising statements from officials on both sides stating that talks were making progress. For now, the mood in the markets is one of cautious optimism as markets hope that the two world leaders are able to work out a partial trade agreement before the December 15 deadline.

The US dollar recovered nicely late last week following the release of a stronger than expected NFP report for November. Earlier last week, a slew of disappointing economic data had forced the greenback to trade under pressure, but a strong jobs report turned things around.