US Dollar Index (DXY) returns below 99.00 with all eyes on the US-China meeting

• The Dollar accelerates its reversal with investors turning cautious ahead of the US-China trade talks.

• Traders are now looking past the strong US Nonfarm Payrolls report seen on Friday.

• US President Trump affirmed this weekend that the negotiations will go "very well" .

The Dollar is featuring the weakest performance of the G8 currencies on Monday as investors shifted their focus from the upbeat US Nonfarm Payrolls report to the trade negotiations between the US and China, due later today in London.

The USD Index (DXY), which measures the value of the Greenback against the world’s six most traded currencies, is accelerating its reversal from post-NFP highs, at 99.35 on Friday, back to levels below 99.00.

The outcome of the US-China talks will drive the USD today

Investors are trimming their US Dollar long bets on Monday, in a cautious stance ahead of a meeting between China and US representatives, which will try to brush off their differences on trade, and revive the spirit that led to a reduction of their reciprocal tariffs after last month’s talks in Geneva.

A phone call between US President Donald Trump and his Chinese counterpart, Xi Jinping, last week eased some of the previous tensions and has improved expectations about today’s meeting. Trump has contributed to the optimistic market mood with a tweet over the weekend showing his confidence that the negotiations will go “very well”.

The calendar is thin on Monday, and the effect of Friday’s stronger-than-expected US Payrolls data is waning. The Fed is on its blackout period, ahead of next week’s meeting, which is likely to be a non-event, as Friday’s employment report has practically confirmed that the bank will keep interest rates unchanged, at least until September.