Forex traders and investors across the world are awaiting further news on the planned trade talks between the US and China, which are due to go ahead at some stage today.
The talks, which are set to occur in Washington DC, may engender a warmer relationship between the two nations. They are currently engaged in the mutual imposition of tariffs worth several billion dollars and the trade war has on several occasions threatened to escalate.
US President Donald Trump, who has spearheaded the move towards tariffs, will not be in attendance. The US government will most likely be represented by a junior official from the Treasury Department.
The dollar index, which monitors its performance compared to other major world currencies, went down 0.1% to 95.186. This was a smaller drop than the day before, but still significant.
Looking ahead, the dollar may be more at risk from ongoing troubles in the US political scene after it was plunged into further disarray overnight.
Two of Trump’s key former allies found themselves mired in legal quandaries, and this could have knock-on effects. Paul Manafort, who served as the head of the Trump presidential campaign, was found guilty on eight counts of various financial crimes by a court in Arlington, Virginia.
Michael Cohen, who was Trump’s lawyer and a “fixer” for him, pleaded guilty to having broken campaign funding rules in a separate case. The exact impact of these developments on Trump’s position remains to be seen, but political instability is a risk for the dollar – especially if the trade talks result in further greenback damage.
Looking more broadly, there are still plenty of events to occupy the minds of forex traders over the course of the coming days.
Aside from its political and trade woes, the dollar will need to contend with the existing US home sales figures for July, which are out today. Analysts expect a small drop, to 5.38 million.
Related to this will be some important mortgage application release data, which is also due out today.
On Thursday and Friday, the US state of Wyoming will host the Jackson Hole Symposium. This event attracts central banking participants from around the world and is a prestigious event.
This year, the event is taking place in a politically charged atmosphere. It’s likely that President Trump will be back in the spotlight there as delegates discuss the impact of his decision to make increasingly politicised moves towards the Federal Reserve.
In recent weeks, Trump has regularly criticised the decisions of the Fed, which has, under previous presidencies, been afforded somewhat more independence.
The symposium is also certain to discuss monetary policy, and traders may take note of any rate rise clues in the meeting’s public output.
Around the world, Thursday will see the accounts of the last European Central Bank (ECB) monetary policy meeting released. This will be followed up later in the day by a preliminary August consumer confidence survey for Europe, which could reveal interesting insights into the bloc’s economic performance and indicate how the euro may perform heading into September.