The U.S. dollar inched higher on Monday, trading steadily ahead of several important U.S. economic releases now that the government shutdown has ended, with the Federal Reserve preparing for its final policy meeting of the year next month.
At 04:00 ET (09:00 GMT), the Dollar Index—measuring the greenback against six major peers—was up 0.1% at 99.282, rebounding after last week’s decline.
Dollar steadies as traders look to incoming data
This week’s attention turns to a wave of delayed U.S. indicators that should offer fresh insight into the health of the world’s largest economy, including Thursday’s closely watched nonfarm payrolls report for September.
The end of the shutdown had postponed several key releases, leaving both markets and Federal Reserve officials with limited visibility into current economic conditions.
“In a week when we should finally start to see US data releases coming through, it is important to note that the outcome of the next Fed rate decision in December looks better priced at a 50% chance of a cut,” said analysts at ING in a note.
“That means that the dollar probably does not have to rally too much on the FOMC minutes released this Wednesday and can take its cue from Thursday’s jobs report.”
A number of Fed officials are also scheduled to speak this week.
“A repeat of the Fed’s recent message that it should not rush into further rate cuts and some uncertainty as to where the neutral policy rate actually sits is probably a mild dollar positive,” ING added.
Euro retreats from recent highs
In Europe, EUR/USD dipped 0.2% to 1.1601, easing off last week’s two-week peak.
Friday’s flash PMIs for November will be the next key batch of data for the eurozone.
“Remember, these have been holding up quite well and are suggesting that businesses could be learning to live with the uncertain international environment here,” ING added.
“The stronger dollar has dragged EUR/USD back to 1.1600. We would expect some demand to come in should it correct lower to the 1.1560/80 area.”
GBP/USD slipped 0.1% to 1.3162, with the pound finding some stability after sharp moves last week triggered by news that Finance Minister Rachel Reeves does not intend to raise income tax rates in the upcoming budget.
Reeves will still need to secure tens of billions of pounds to meet her fiscal goals in the November 26 annual budget.
Yen weakens after Japan GDP miss
In Asia, USD/JPY rose 0.1% to 154.68 after data showed Japan’s economy contracted 1.8% annualized in the third quarter—still negative, but slightly better than the median forecast of a 2.5% drop.
Quarter-on-quarter GDP slipped 0.4%, a smaller decline than expected, yet still reflecting fading economic momentum.
Exports weakened under the pressure of newly implemented U.S. tariffs, while household spending contributed only modestly as inflation continued to squeeze consumers.
The one bright spot was capital expenditure, which increased and suggested companies remain willing to invest despite global trade headwinds.
USD/CNY added 0.1% to 7.1045, while AUD/USD edged up 0.1% to 0.6534.