The U.S. dollar moved slightly higher on Monday, hovering near a three-month peak as investors awaited fresh data to assess the strength of the U.S. economy.
At 04:15 ET (09:15 GMT), the Dollar Index — which measures the greenback’s performance against six major currencies — was up 0.1% at 99.732, close to its strongest level since August.
Focus Turns to Private Sector Indicators
The dollar found support after last week’s Federal Reserve meeting, where policymakers cut interest rates by 25 basis points, as widely anticipated, but cast doubt on the likelihood of another reduction before year-end.
As a result, markets have scaled back expectations for a December rate cut, now pricing in about a 68% chance of another move.
With the ongoing U.S. government shutdown expected to delay the release of key labor data — including Friday’s nonfarm payrolls report and job openings earlier in the week — investors are turning their attention to privately sourced economic indicators.
“Today sees the ISM manufacturing release for November, which contains the employment component,” said analysts at ING, in a note. “It’s not clear if we will see the JOLTS job opening data tomorrow, but on Wednesday, the monthly ADP jobs release will be a big market mover – and probably the biggest chance of the week for the dollar bear trend to restart.”
Euro Near Three-Month Low
In Europe, the euro weakened, with EUR/USD down 0.2% to 1.1511, hovering near a three-month low. Data showed that Germany’s manufacturing sector continued to struggle in October, while France’s output also remained subdued in the early part of the fourth quarter.
The European Central Bank kept interest rates steady at 2% for the third consecutive meeting last week, signaling that policy was in a “good place” as downside risks to growth appear to ease.
“We do get a heavy slate of European Central Bank speakers,” said ING. “ECB rhetoric looks unlikely to help EUR/USD, however. The debate leans more towards whether eurozone inflation undershoots and the ECB requires another rate cut.”
Meanwhile, GBP/USD slipped 0.2% to 1.3123 ahead of this week’s Bank of England policy meeting, where rates are widely expected to remain unchanged. The pound also faced pressure from political uncertainty surrounding Finance Minister Rachel Reeves, who is set to deliver the government’s budget later this month.
Asia: Yen and Aussie in Focus
In Asia, USD/JPY edged up 0.1% to 154.20, keeping the yen near its weakest level since early February. The Bank of Japan left interest rates unchanged last week, as expected, though Governor Kazuo Ueda suggested that a rate hike could be on the table depending on future wage growth trends.
The USD/CNY pair traded slightly higher at 7.1192 after touching a one-year low last week. Private purchasing managers index data showed China’s manufacturing sector expanded more slowly than forecast in October, although it remained in growth territory — a contrast to the government’s PMI data released earlier, which indicated contraction.
Meanwhile, the AUD/USD pair rose 0.1% to 0.6552, with attention turning to the Reserve Bank of Australia’s meeting on Tuesday. The RBA is expected to keep rates unchanged but may strike a more hawkish tone following hotter-than-expected inflation data in the third quarter.
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