The United States dollar index (DXY) began the week steady at 100.196, holding just below the six-month high of 100.395 reached on Friday.
The index rose 0.9% over the previous week as delayed U.S. economic data and dovish remarks from Federal Reserve official Williams boosted expectations of a December rate cut.
U.S. labour data released late due to the government shutdown showed stronger-than-expected jobs growth for September, but a higher unemployment rate and downward revisions to previous months painted a more mixed picture.
The prolonged shutdown has also delayed key economic indicators, including inflation data, adding uncertainty to the near-term outlook for the U.S. dollar.
According to the CME Group FedWatch Tool, market pricing now reflects a 69.4% chance of a 25 bps rate cut in December, up from 63% a week earlier.
Eurozone momentum weakens
EUR/USD opened the week flat at 1.15102 after a 1% weekly decline. The U.S. dollar wavered following the delayed non-farm payroll report, though the data offered limited clarity given its age and partial October–November readings hinting at further labour market deterioration.
The positive payroll numbers did little to shift expectations ahead of the Federal Reserve’s 9–10 December meeting. The U.S. confirmed it will not publish an October NFP report, with partial October data expected to be bundled with November figures on 16 December — after the Fed’s policy decision.
Flash PMI figures showed steady U.S. growth: Manufacturing PMI printed at 51.9, and Services PMI rose to 55, lifting the Composite PMI to 54.8.
Across Europe, conditions remained subdued. Eurozone HICP inflation in October was confirmed at 2.1%, with core at 2.4%. Consumer confidence eased to -14.2.
Germany’s PPI rose 0.1% on the month but fell 1.8% year-on-year.
November PMI results pointed to weakening momentum: Germany’s Composite PMI fell to 52.1, while the Eurozone Composite slipped to 52.4. Manufacturing readings moved back into contraction, maintaining pressure on the Euro.
Aussie retests multimonth lows despite stronger domestic PMIs
AUD/USD began the week at 0.6457, up 0.1% after a 1.2% weekly loss. Improving Australian PMI readings were not enough to offset broader DXY strength and mixed global sentiment, with the pair struggling to extend its late-week rebound.
Australia’s preliminary PMIs for November showed solid improvement: the Manufacturing PMI returned to expansion at 51.6, while Services and Composite rose to 52.7 and 52.6, respectively.
The Reserve Bank of Australia has maintained a cautious stance. Minutes from its November meeting signalled a willingness to hold rates steady if data continues to outperform.
RBA Assistant Governor Sarah Hunter warned that above-trend growth could reignite inflation pressures, adding that monthly inflation data can be volatile and must be interpreted carefully.
Pound faces selling pressure ahead of Autumn Budget
GBP/USD fell below 1.3100 after breaking its recent consolidation range. Concerns over the UK’s fiscal outlook, combined with a broadly stronger DXY, drove renewed downside momentum.
A pullback in U.S. rate-cut expectations and worries over stretched AI-related equities supported the Greenback. UK CPI for October underscored a cooling inflation trend, with headline CPI rising 3.6% — matching expectations and down from 3.8% in September. This reinforced expectations for a Bank of England rate cut in December, with odds rising to 85% from 80%.
Sterling briefly recovered on global equity strength following strong Nvidia earnings, but fell again after UK Retail Sales unexpectedly dropped 1.1% in October. UK Composite PMI slipped to 50.5, well below expectations of 51.8.
Markets now await the UK Autumn Budget, with the Financial Times reporting the government has abandoned income-tax hikes, while the Guardian suggests the Chancellor may extend the freeze on tax thresholds.
Yen under pressure as intervention risk looms
USD/JPY rebounded toward nine-month highs, trading near 154.60 after recovering from 153.62 intraday. A stabilising U.S. dollar and persistent policy divergence between the Federal Reserve and the Bank of Japan kept the Yen on the defensive.
Japan’s new government under Sanae Takaichi has signalled greater fiscal expansion, further weakening the Yen. Finance Minister Satsuki Katayama noted rising negative effects from the currency’s depreciation and warned that the government is monitoring market movements closely.
With the pair approaching levels that previously triggered intervention, traders remain watchful.
Economic Calendar Week Ahead
On Monday, there are no significant economic releases scheduled.
Tuesday will see the United States publish the Chicago Fed National Activity Index and the Dallas Fed Manufacturing Index. South Korea will release consumer confidence figures. The Eurozone will report new car registrations, while the United Kingdom will issue the CBI Distributive Trades survey.
On Wednesday, the United States will release ADP employment data, PPI inflation, retail sales, the S&P/Case-Shiller home price index, consumer confidence, business inventories, and pending home sales. South Korea will publish business confidence.
Australia will release quarterly construction work done and CPI inflation. The Eurozone will publish the ECB Financial Stability Review, while the United Kingdom will deliver the 2025 Autumn Budget.
During Thursday's session, the United States will release building permits, durable goods orders, the goods trade balance, inventories data, Chicago PMI, new home sales, and the PCE inflation report.
Personal income and spending figures are also due. U.S. markets will be closed for Thanksgiving. South Korea will announce its interest-rate decision.
The Eurozone will publish economic sentiment, industrial sentiment, consumer confidence, and ECB meeting accounts.
On Friday, Canada will release its current account. South Korea will publish industrial production and retail sales. Japan will deliver Tokyo CPI, unemployment, industrial production, retail sales, and housing starts.
Australia will report housing credit and private-sector credit. The United Kingdom will publish Nationwide house prices. The Eurozone will release inflation expectations data.
Over the weekend, Canada will release GDP growth figures, while China will publish NBS manufacturing and non-manufacturing PMI readings.
