The trade war has lasted for almost 1 year and is having a negative impact both in the US and China as well as the wider global economy. How the meeting goes and whether a truce is made could cause volatility for dollar interbank rates.

A trade deal would be welcome news for the US economy although much of the strength of the dollar is stemming from the uncertain global outlook on growth which is persuading investors to move to the safety of the dollar. If anything the dollar could begin to weaken if investors become more confident in the global outlook. Judging by recent dialogue between the US and China this still seems some way off. Meanwhile in the US the economic data continues to look weaker after US new home sales fell for the second month in a row by 7.8% reinforcing the view that the US Fed will act and cut interest rates.

The sanctions follow tussles in the in the Gulf of Oman where US vessels were attacked and a $110 million drone shot down which nearly escalated into a military strike from the US. With tensions already running high the dollar could possibly see volatility on the back of any new developments. The US dollar retains its safe haven status and any movement closer to a war may perhaps result in US dollar strength.

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