It’s the first week of the month for the US Dollar and there’s plenty of data that could make for big market movements. On top of the usual round of Non-farm payrolls and unemployment rates on Friday, markets will be gauging the tone of the Trump-Jingping meeting on Wednesday.

It’s expected that the talks will be difficult in light of President Trump’s transparent distaste for Chinese trade and has on many occasions during the Presidential campaign, labelled China a ‘currency manipulator’.

Well they, I think they’re grand champions at manipulation of currency. So I haven’t held back.
– Donald Trump, US President

Trump has promised to impose trade tariffs on Chinese goods to encourage US manufacturing but given that the US hold a $350bn trade deficit with China, does Trump really have any leverage?

The talks will likely have an impact on the USD as investors look to see whether Trump will follow through with his campaign promises, to determine the likelihood of other campaign promises being fulfilled.

It will also be an opportunity for Trump to talk about the growing concerns in North Korea. Trump himself has called out China to eliminate the threat of nuclear weapons held by North Korea or the US will look to take unilateral action against them.

Economic data this week

With the FED’s promise of four rate hikes this year, economic data will be of key importance to USD investors to help determine when the next one will materialise.

Tomorrow’s services and Non-manufacturing PMI data – the key measures for business performance and optimism followed by Friday’s Non-farm payrolls and unemployment rates. The US has enjoyed strong employment figures as late, reaching its near max capacity as set out by the FED. If data echoes the recent strong performance investors will see the likelihood of another interest rate hike happening in the near term.

GBP/USD has already begun falling from its monthly highs of 1.26 and in my view, rates of 1.23 are to be expected if strong data comes to fruition.