The U.S. dollar climbed on Monday, gaining ground against both the euro and the Japanese yen as currency markets shifted into a defensive posture ahead of the long-delayed wave of U.S. economic indicators set to resume this week.
The move came as investors looked past U.S. President Donald Trump’s rollback of tariffs on more than 200 imported food products. Analysts at multiple firms, including ING and Rabobank, noted that the decision had been expected given the political pressure surrounding consumer prices, blunting any reaction in foreign-exchange trading.
Traders Prepare for Data Backlog
Following the end of the federal government shutdown, key reports that had been stalled for weeks—ranging from inflation metrics to consumer spending and industrial production—are scheduled for release. The most anticipated will be Thursday’s September nonfarm payrolls report, which is expected to offer a backward-looking but still crucial snapshot of labor-market momentum.
“Markets are refocusing on the data flow now that Washington’s disruptions have passed,” said Uto Shinohara, senior investment strategist at Mesirow Currency Management. He added that the mixture of softening labor indicators and still-elevated underlying inflation had created “one of the murkiest policy backdrops in years.”
Futures markets now assign less than a 40% chance of a quarter-point Federal Reserve rate cut in December—down sharply from expectations only two weeks ago. Similar sentiment was echoed by analysts at Goldman Sachs, who wrote that while the delayed reports will offer limited clarity, they still expect the medium-term trend to reveal increasing strain in the job market.
Fed Signals Caution
Comments from Federal Reserve Vice Chair Philip Jefferson reinforced that caution. Speaking at an event in Washington, Jefferson said the central bank must “move slowly” when considering further policy easing, a remark that dampened hopes for near-term rate cuts.
Joseph Trevisani of FXStreet said markets are stuck in a holding pattern until stronger signals emerge: “There’s a lot of noise but not a lot of conviction. Without new, decisive data, currencies will stay confined to their recent ranges.”
Global Context: UK and Japan Under Pressure
The dollar’s strength also reflected weakness elsewhere. Sterling drifted lower ahead of the UK government’s budget announcement, as investors weighed the possibility of further fiscal tightening. Meanwhile, Japan reported its first quarterly economic contraction in six quarters, adding pressure on the yen, which has been struggling under the weight of wide U.S.–Japan interest-rate differentials.
Market Snapshot
- Euro down 0.31% at $1.1585
- Japanese yen weaker at 155.20 per dollar, a 0.44% decline
- Equity markets slipped late in the session, with all three major U.S. indexes falling below their 50-day moving averages—a signal traders often view as a bearish short-term indicator
Despite Monday’s moves, foreign exchange strategists widely expect the dollar to continue trading within a narrow band until the data backlog clears and the Fed’s path becomes clearer.
