Dollar Edges Higher as Markets Await Key U.S. Economic Data and Fed Rate Signals

The U.S. dollar strengthened slightly on Monday as global investors prepared for a busy week of economic releases following the end of the government shutdown. With fresh data finally set to resume after more than 40 days of silence, markets are hoping for clearer signals on the Federal Reserve’s potential rate move in December.

Market reaction to U.S. President Donald Trump’s reversal of planned tariffs on over 200 food products remained limited. Analysts noted the shift was largely expected amid rising cost-of-living pressures, reducing any major surprise factor for traders.

Sterling continued to struggle after a volatile end to last week, driven by intense speculation surrounding the UK government’s upcoming November 26 budget. The British pound slipped 0.11% to $1.3161, extending losses sparked when Finance Minister Rachel Reeves confirmed she would not raise income tax rates. Investors had anticipated a tax increase to help close a significant fiscal gap, and the unexpected stance caused borrowing costs to surge on Friday.

Meanwhile, the safe-haven Swiss franc hovered near a one-month high at 0.7941 per dollar, supported by heightened caution following recent turbulence across global equities. The euro dipped 0.11% to $1.1607, and the Australian and New Zealand dollars also eased slightly during early Asian trading. The U.S. dollar index inched up to 99.37.

This week’s focus centers on the long-awaited September nonfarm payrolls report due Thursday, a release that could shape expectations for a December Fed rate cut. Carol Kong of CBA noted that markets are primed for softer payrolls data, which could revive bets on easing and weaken the dollar.

Despite signs of slowing economic momentum in private-sector indicators, markets have scaled back expectations of a December rate cut, placing the odds at just above 40%. Yet the dollar has struggled to gain momentum as traders unwind long positions ahead of what could be a volatile period for U.S. data.

Elsewhere, the yen hovered near 155 per dollar, with traders monitoring the risk of intervention. Japan’s latest GDP report showed a 1.8% annualized contraction in Q3, reflecting export weakness tied to U.S. trade policies, though the currency reaction remained muted.