The U.S. dollar showed slight gains on Tuesday, stabilizing after hitting a seven-week low amid anticipation of key U.S. employment and inflation data that could reinforce expectations for a Federal Reserve rate cut next week.
By 04:15 ET (08:15 GMT), the Dollar Index, which tracks the greenback against six major currencies, was up 0.1% at 97.447, rebounding moderately after its decline to the lowest level since late July.
Benchmark payroll revisions expected
The dollar’s recent decline follows weak U.S. labor market signals. Last Friday, the nonfarm payrolls report showed a significant slowdown in job creation for August, while the unemployment rate climbed to near a four-year high.
The Bureau of Labor Statistics is due to release preliminary benchmark revisions for the period April 2024 to March 2025. Economists predict a downward adjustment of up to 800,000 jobs, suggesting that the Fed may be lagging in achieving maximum employment.
“This time last year, the preliminary revision was -818k and it looks like we would need to see a bigger number than that to trigger a fresh leg lower in short-term U.S. interest rates and the dollar,” ING analysts said in a note.
Investors are also watching August’s U.S. consumer price index to assess how Trump-era tariffs are influencing inflation. Bank of America expects inflation to remain “sticky,” with headline CPI projected to rise from 2.7% to 2.9% year-on-year, its highest since July 2024, while core CPI is forecast at 3.1%.
The Federal Reserve’s next policy meeting is set for next week, and markets widely anticipate a resumption of rate cuts after a year of steady policy.
French political upheaval pressures euro
EUR/USD slipped 0.1% to 1.1750 as France’s parliament voted down the government on Monday over budget plans aimed at controlling the national debt, deepening uncertainty in the eurozone’s second-largest economy.
“The question now is whether the discordant political parties decide to agree on the ’what’ (how to reach an agreement on the budget) before agreeing on ’who’ to lead the government. None of this can be seen as good news for the euro,” ING said.
The European Central Bank is expected to maintain rates at its upcoming policy meeting on Thursday.
GBP/USD rose slightly 0.1% to 1.3560, supported by the weaker dollar after a gain of more than 0.5% on Friday.
Currency volatility elsewhere
USD/JPY fell 0.3% to 147.07 following sharp swings on Monday after Prime Minister Shigeru Ishiba resigned unexpectedly. His departure heightens political uncertainty in Japan, likely delaying further Bank of Japan rate hikes.
USD/CNY traded 0.1% lower at 7.1270, with the yuan reaching its strongest level since November 2024. The move followed the People’s Bank of China setting the highest yuan midpoint in 10 months, signaling Beijing’s effort to stabilize the currency amid U.S. tensions. A stronger yuan combined with a weaker dollar makes U.S. exports to China more attractive.
AUD/USD climbed 0.3% to 0.6609, hitting a seven-week high, even as a private survey showed Australian consumer sentiment weakened in September due to persistent uncertainty about interest rates and slower economic growth.
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