U.S. Dollar Steadies as Markets Await Fed Chair Powell’s Speech and Key Employment Data

The U.S. dollar remained steady on Monday as traders awaited a speech from Federal Reserve Chair Jerome Powell later in the day and anticipated Friday’s crucial employment report.

As of 04:25 ET (08:25 GMT), the Dollar Index, which measures the dollar against a basket of six other major currencies, traded slightly lower at 100.035. This comes after the index recorded its fourth consecutive weekly decline and its ninth in the last 10 weeks.

Focus on Nonfarm Payrolls and Powell’s Speech

The U.S. dollar weakened last week following the release of the Federal Reserve’s preferred inflation indicator, which suggested that inflationary pressures were easing shortly after the central bank initiated its rate-cutting cycle.

Fed Chair Powell is expected to speak to the National Association for Business Economics in Nashville, Tennessee, on Monday, where he will likely provide more details about the Fed’s decision to cut the benchmark interest rate by 50 basis points earlier this month.

A survey of professional forecasters released by the group on Sunday identified a “monetary policy mistake” as the most significant downside risk to the U.S. economy over the next 12 months.

The upcoming October nonfarm payrolls report, due on Friday, is the next key data point that could influence the trajectory of U.S. interest rate cuts, with economists predicting that the U.S. economy will have added around 144,000 jobs.

Euro Awaits Inflation Data

In Europe, the EUR/USD edged up by 0.1% to 1.1172, staying relatively stable ahead of Tuesday’s release of the flash September inflation data, which will be crucial as European Central Bank (ECB) officials consider the possibility of another rate cut in October.

German inflation figures are due ahead of the eurozone release, following last week’s data that showed inflation in France and Spain rose less than expected, thereby raising expectations of an October rate cut by the ECB.

Pound Strengthens Slightly, While Yen Retreats

The GBP/USD pair traded 0.2% higher at 1.3399, not far from last week’s high of 1.3430, the highest level since February 2022. Earlier on Monday, data showed that the British economy grew more slowly than initially estimated in the second quarter, with gross domestic product (GDP) expanding by 0.5% compared to an earlier estimate of 0.6%.

The USD/JPY rose by 0.2% to 142.44, as the Japanese yen gave up some of its gains from last week following signals from Japan’s incoming prime minister that monetary policy should remain accommodative.