US Dollar Declines as Markets Await Key US Election and FOMC Rate Decision
Early Monday trading saw the US dollar weakening against major currencies as markets digested the surprisingly low October employment report from Friday and shifted their focus to two significant events this week: the highly anticipated US Election Day on Tuesday and the Federal Open Market Committee’s (FOMC) interest rate decision on Thursday, following a two-day policy meeting.
Quiet Start to the Week with Limited Data Releases
The economic calendar kicks off lightly this Monday, featuring only September’s factory orders report at 10:00 am ET. Analysts anticipate minimal movement until more data is released later in the week.
Tuesday’s Spotlight: US Election and Service Sector Reports
As the presidential election results may take time to finalize, Tuesday’s early focus will be on the weekly Redbook same-store sales data, followed by key services sector updates from S&P Global and the Institute for Supply Management.
Midweek Preview: Light Data Flow on Wednesday
Wednesday will see a sparse data schedule, with only weekly mortgage application numbers and oil inventory figures being released. The market’s primary attention will remain on Thursday’s major FOMC rate announcement.
FOMC Rate Decision and Economic Indicators to Watch
According to the CME’s FedWatch tool, there is a 98.3% probability that the FOMC will announce a 25-basis-point rate cut, adjusting the target range to 4.50%–4.75%. A slim 1.7% chance points to a more significant reduction to 4.25%–4.50%.
Thursday morning’s economic releases, including weekly jobless claims and initial Q3 productivity and unit labor cost reports, will add context before the FOMC's 2:00 pm ET announcement.
Consumer Sentiment Expected Friday
The University of Michigan’s preliminary Consumer Sentiment report for November is due on Friday, providing further insights into consumer confidence heading into the holiday season.
Forex Market Overview Heading Into Monday
EUR/USD
The euro edged up to 1.0905, gaining from 1.0832 at the close of US trading on Friday and 1.0864 earlier that morning. Despite the Eurozone’s manufacturing PMI showing continued contraction in October, investor confidence data released Monday indicated some recovery. ECB board members Frank Elderson and Elizabeth McCaul are set to speak at 8:30 am ET and 10:15 am ET, respectively. The next ECB policy meeting is on December 12.
GBP/USD
The British pound rose to 1.2969, up from 1.2918 at Friday’s US close and 1.2910 earlier that morning. The Bank of England is expected to announce a 25-basis-point rate cut during its Thursday meeting. Monday’s schedule lacks any significant UK data.
USD/JPY
The yen strengthened to 151.7281 from 152.0752 at Friday’s US close and 152.7121 earlier that morning. With Monday being a public holiday in Japan, no new data was released. The Bank of Japan’s next meeting is scheduled for December 18-19.
USD/CAD
The Canadian dollar gained as USD/CAD dipped to 1.3903 from 1.3957 at Friday’s close and 1.3931 earlier in the day. No Canadian economic data is expected on Monday, with the Bank of Canada’s next meeting set for December 11.
