US dollar recovers ahead of economic reports

Today’s headlines

What’s happening: The US dollar moved higher on Monday, recovering some of the losses made last week.

What happened: Investors continued monitoring comments from Federal Reserve officials regarding future interest rate cuts.

Meanwhile, markets remained cautious ahead of a busy week of economic reports, which were delayed due to the government shutdown.

Why it matters: Several economic reports that were delayed during the longest federal government shutdown in US history are scheduled for release this week. Markets are eager to get insights into the current health of the US economy. The much-awaited NFP (nonfarm payrolls) report for September will be released on Thursday.

Fed Vice Chairperson Philip Jefferson said that the central bank needs to move slowly with further interest rate cuts. Despite signs of weakness in the world’s largest economy, investors lowered their speculation of the Fed announcing an interest rate cut in December, which lent support to the US dollar.

Meanwhile, the Trump administration was forced to remove tariffs on a wide range of agricultural and processed-food items imported from countries around the world in a bid to ease domestic inflation.

The US dollar index, which measures the greenback’s performance versus a basket of major peers, gained around 0.3% to 99.59 on Monday.

The GBP/USD forex pair fell to 1.3155 on Monday, while the Japanese yen remained close to a nine-month low versus the greenback after data showed Japan’s economy contracted by 1.8% on an annualised basis in the third quarter.

What to watch: Investors await the release of major economic reports, including existing home sales, S&P PMIs, NAHB housing index, ADP employment data and the NFP report, this week. Minutes from the Federal Reserve’s latest meeting, due to be released on Wednesday, will also remain in focus.

Data on nonfarm payrolls will be released on Thursday. The US economy, which added just 22,000 jobs in August, is expected to add 50,000 jobs in September. Analysts expect the unemployment rate to remain at 4.3% for September, while average hourly earnings are expected to rise 0.3%.

The markets today

UK stocks in focus today ahead of the budget and some major economic reports

Context: Equity markets in the UK fell on Monday, recording losses for the third straight session.

Details: On Friday, UK Chancellor Rachel Reeves decided against hiking income tax rates at the Budget hearing, citing upbeat economic projections.

Markets remained concerned, however, around the country’s fiscal outlook due to speculations that Reeves had taken this call to pacify voters and labour market representatives.

Labour market data for September and October, published last week, showed weakening trends with a rise in unemployment and continued layoffs by businesses.

Amid weakness in the labour market and stubbornly high inflation, investors expect the Bank of England to cut interest rates at its December meeting.

UK’s FTSE 100 index fell 0.24% to close at 9,675.43 on Monday, while the more domestically focused FTSE 250 dipped 0.60% to settle at 21,687.90.

Rolls-Royce, HSBC, Barclays and Lloyds were among the top losers on Monday.

What to watch: With no major economic data scheduled for release today, investors await reports on inflation rate, PPI output and retail price index on Wednesday. The annual inflation rate in the UK, which remained at 3.8% in September, is expected to ease to 3.6% in October.

Analysts expect factory gate prices for UK-manufactured goods to rise 3.5% year-over-year in October following 3.4% growth in September. The retail price index is projected to rise by 4.3% year-over-year in October, easing from 4.5% in the previous month.

Other Markets: US trading indices closed lower on Monday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 1.18%, 0.92% and 0.83%, respectively.

The news shaping the markets

Ukraine’s President Volodymyr Zelenskyy announced an agreement with France’s President Emmanuel Macron to receive up to 100 Rafale fighter jets. The news sent the RUB/USD pair lower in forex trading this morning.

Canada’s headline inflation rate eased to 2.2% in October from 2.4% in September, lending support to the CAD/USD forex pair.

Brazil’s IBC-Br economic activity index declined 0.2% in September following a 0.4% gain in August, which sent the BRL/USD pair lower in forex trading this morning.

The European Commission raised its 2025 growth projections for Eurozone’s economy to 1.3%, from its prior estimate of 0.9%. However, the EC saying that it expects growth to ease to 1.2% in 2026 exerted pressure on the EUR/USD forex pair.

India’s trade deficit rose to $41.68 billion in October from $26.23 billion in the year-ago period. However, the INR/USD pair edged higher in forex trading this morning.

What else to watch today

South Africa’s weekly bond auction (1330 UAE Time), Canada’s housing starts (1715 UAE Time), as well as US ADP employment change (1715 UAE Time), NY Fed services activity index (1730 UAE Time), Redbook index (1755 UAE Time), factory orders (1900 UAE Time) and NAHB housing market index (1900 UAE Time).