The U.S. dollar held close to a three-month peak on Monday as investors looked ahead to a slate of economic data this week that could offer fresh insight into the strength of the world’s largest economy and signal whether the Federal Reserve will maintain its hawkish posture.
Asia-Pacific trading was subdued due to a holiday in Japan, leaving major currencies largely range-bound but anchored near recent lows against the firm greenback.
The euro slipped to a three-month low, trading at $1.1536, while sterling declined 0.19% to $1.3145 ahead of the Bank of England’s interest-rate decision later this week. The pound was also dampened by rising political pressure on British Finance Minister Rachel Reeves and uncertainty surrounding her November budget, which investors fear could weigh on business activity and household spending.
The yen remained under heavy pressure, trading around 154.10 per dollar near an eight-and-a-half-month low – as wide U.S.–Japan interest rate differentials continued to weaken the Japanese currency. It also hovered near record lows against the euro at 177.86.
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Market sentiment was tempered by an ongoing U.S. government shutdown, which is expected to delay Friday’s nonfarm payrolls report. Traders will instead focus on private employment figures from ADP and ISM purchasing managers’ surveys for clues on economic momentum.
“The lack of information is playing into the current calm tone,” said Rodrigo Catril, senior FX strategist at National Australia Bank. “Any large surprise in private data could shift sentiment, but for now, nothing suggests the Fed needs to move quickly.”
The Fed trimmed interest rates by 25 basis points last week, but Chair Jerome Powell cautioned that further easing may not occur this year without clearer economic signals. Several Fed officials also expressed discomfort with the rate cut, reinforcing a cautious policy outlook.
Markets have since reduced expectations for a December rate cut, with traders now pricing roughly a 68% chance of another move.
The dollar index steadied at 99.73, close to its strongest level since August.
Despite comments from Bank of Japan Governor Kazuo Ueda hinting at a possible rate hike as early as December, markets remain unconvinced by the BOJ’s gradual stance, adding pressure on the yen and prompting fresh warnings from Japanese authorities.
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“If we approach 155 per dollar, intervention risks rise, This underscores the argument that the BOJ cannot delay much longer,” Catril added.
In commodity-linked currencies, the New Zealand dollar hovered near a six-and-a-half-month low at $0.5730, while the Australian dollar edged up 0.2% to $0.6566, buoyed by expectations that the Reserve Bank of Australia will hold rates steady on Tuesday following a higher-than-expected core inflation reading.
Esther Ososanya is an investigative journalist with Pinnacle Daily, reporting across health, business, environment, metro, Fct and crime. Known for her bold, empathetic storytelling, she uncovers hidden truths, challenges broken systems, and gives voice to overlooked Nigerians. Her work drives national conversations and demands accountability one powerful story at a time.
