Dollar holds firm, trade developments in focus – London Business News | London Wallet

The dollar index traded within a narrow range on Monday as easing US-China tensions provided support to the greenback.

Market sentiment improved slightly after President Donald Trump signalled that broad tariffs on China would be unsustainable and negotiators from both sides confirmed plans for renewed talks in the coming days.

Any progress this week could reinforce risk appetite and support the dollar, while setbacks could quickly reverse the tone.

Attention will also turn to Friday’s CPI release, one of the few key data points available amid the shutdown. Headline inflation is expected to hold at 0.4% and core at 0.3%. Readings in line with or below forecasts would likely reinforce expectations of deeper policy easing in 2025 and 2026, putting renewed downward pressure on yields and the dollar.

Only a significantly hotter-than-expected print would meaningfully challenge the current easing narrative.