US dollar slips ahead of key events

The US dollar weakened against its major peers on Monday as anticipation among investors builds ahead of significant events later this week. Market focus has shifted to the Federal Open Market Committee (FOMC) meeting announcement scheduled for Wednesday and the release of October’s employment report on Friday.

The EUR/USD finished 0.53% higher at the London close, while GBP/USD saw a 0.34% uptick. The biggest mover of the day was AUD/USD, hitting a 3-session high, up 0.66% on the day.

The dollar index (DXY) fell 0.42% and is currently sitting at 106.10.

Tuesday’s agenda includes key economic indicators such as the employment cost index for Q3, home price data for August, and consumer confidence figures for October. Wednesday morning will see the release of ADP’s private payrolls estimate, the Treasury’s quarterly refunding data, and manufacturing statistics from S&P Global and the Institute for Supply Management. These releases will set the stage for the highly anticipated FOMC announcement later in the day.

Wednesday’s policy-setting by the Federal Open Market Committee (FOMC) is widely expected to maintain the federal funds rate during its two-day meeting this week. Investors will be keenly observing the post-meeting statement and remarks from Federal Reserve Chair Jerome Powell for insights into the future trajectory of monetary policy.

Thursday will bring attention to productivity data for Q3, weekly jobless claims, and natural gas stocks. The week concludes with nonmanufacturing data for October on Friday, following the anticipated non-farm payrolls report.

Friday’s employment report holds equal importance, especially following the surprising robustness observed in September. Another month of strong payroll growth could potentially unsettle markets and the Federal Reserve, especially considering the prevailing anticipation of a slowing economy.

Federal Reserve officials are presently observing a ‘quiet period’ before the FOMC meeting. However, they are anticipated to provide insights on the economy and policy later in the week, offering further clues on their next move.