The United States dollar index (DXY) started the week steady at 99.27, after ending Friday's session around two-week lows as traders braced for a backlog of delayed U.S. economic data following the government’s reopening.
Investors expect forthcoming figures to reveal a weakening economy, which continues to pressure the Greenback.
President Donald Trump signed the House-passed funding package late Thursday, officially ending the record 43-day government shutdown.
The bill extends funding for most agencies until 30 January and fully funds others for the year.
Markets anticipate that resumed U.S. dataflow will highlight labour market cooling and a broader slowdown. The White House has already warned that the October unemployment rate may never be released due to missing household survey inputs.
Rate expectations also shifted lower. CME Group FedWatch Tool now indicates a 44.4% probability of a 25 bps cut at the December Federal Reserve meeting, down sharply from 62.9% last week.
Hawkish commentary, however, limited further the U.S. dollar's downside. Boston Fed President Susan Collins said policy rates may need to stay “on hold for some time”, while Raphael Bostic and Beth Hammack also emphasised they favour keeping rates unchanged.
Euro posts weekly gains, supported by steady Eurozone growth
The EUR/USD currency pair started the week at 1.16195, after logging a 0.5% weekly rise as risk sentiment faltered amid speculation that the Fed may pause its easing cycle.
Eurozone Q3 GDP was revised marginally upward to 1.4% YoY, with quarterly output rising 0.2%.
The DXY traded modestly higher at 99.31 on Friday, supported by hawkish Fed remarks.
Miran warned that policymakers risk errors if they rely too heavily on backward-looking indicators, while Schmid reiterated his dissent against the last rate cut, arguing policy is “only modestly restrictive”.
Australian Dollar lifted by labour data, Chinese resilience
The AUD/USD currency pair held near 0.6534 on Monday after logging a 0.6% gain last week as strong domestic labour data and firmer Chinese indicators supported the currency.
Australia’s unemployment rate fell to 4.3% in October, with a robust net employment gain of 42.2K and 55.3K full-time jobs added.
The results reinforced expectations that the Reserve Bank of Australia will remain cautious but data-dependent, underscored by Deputy Governor Andrew Hauser’s comments last week that policy remains restrictive.
Chinese retail sales rose 2.9% YoY and industrial production increased 4.9%, providing further support, given Australia’s trade exposure.
Pound pressured by weak UK data despite narrowing fiscal gap
The GBP/USD pair ticked 0.1% lower in early Monday deals to 1.3165, as the Pound continues to struggle near multi-month lows. The Office for Budget Responsibility reported that stronger tax receipts and wage gains narrowed the UK’s fiscal gap from £30 billion to £20 billion, prompting a modest rebound in Sterling and slight easing in gilt yields.
Still, gilt yields remain elevated, reflecting investor concerns after reports suggested Prime Minister Keir Starmer and Chancellor Rachel Reeves may scrap planned adjustments to tax bands in the 26 November Autumn Budget.
Weak UK employment data and sluggish Q3 GDP (0.1% expansion; unemployment 5%) firmed expectations of a December Bank of England rate cut. Markets will closely watch the October CPI report on Wednesday.
Yen weakens toward nine-month lows
The USD/JPY pair climbed back toward 154.60 after dipping early on Friday, with the Yen at its weakest levels since February.
The pair rose as the U.S. Dollar steadied despite ongoing uncertainty over delayed U.S. data.
The Japanese Yen remains under pressure as new Prime Minister Sanae Takaichi pursues aggressive fiscal measures alongside the Bank of Japan’s gradual policy approach.
Finance Minister Satsuki Katayama warned that the negative effects of Yen weakness are becoming “more visible”, keeping intervention risks in focus as the currency approaches sensitive levels.
FX Week Ahead: Economic Calendar
On Monday, Japan will release preliminary GDP figures and final industrial production data, while China reports its latest foreign direct investment flows.
On Tuesday, Canada publishes its CPI inflation report, and the United States releases the NY Empire State Manufacturing Index and the monthly budget statement, alongside speeches from Fed officials Williams, Jefferson, Kashkari, Waller and Logan.
Australia will issue the minutes from the latest RBA meeting.
On Wednesday, U.S. data will include ADP employment, import and export prices, industrial and manufacturing production and the NAHB housing market index, along with a speech by Fed Vice Chair Michael Barr.
Japan reports trade data and machinery orders. Australia releases its quarterly wage price index, while the UK publishes CPI, PPI and the retail price index.
The Eurozone will release current account data and CPI figures.
On Thursday, the U.S. reports building permits and housing starts and releases the FOMC minutes, with Fed President Williams also scheduled to speak. China announces the loan prime rate decisions.
The Eurozone holds an ECB General Council meeting, while the UK releases CBI industrial trends data.
On Friday, the U.S. publishes weekly jobless claims, the Philadelphia Fed manufacturing index, existing home sales and the Federal Reserve’s balance sheet, accompanied by remarks from Fed officials Hammack, Cook and Goolsbee.
South Korea reports PPI inflation, Australia releases S&P Global manufacturing and services PMI flash estimates, and Japan publishes its inflation rate and PMI data.
The UK releases GfK consumer confidence, retail sales and PMI flash readings, while the Eurozone releases PMI figures and negotiated wage growth data.
On Saturday, the United States publishes the University of Michigan consumer sentiment final reading and PMI flash estimates, alongside speeches from Fed officials Barr, Jefferson and Logan. Canada reports its new housing price index and retail sales.