TSX futures subdued as gold rally takes a breather
Investing.com - The U.S. dollar eased marginally higher Monday, with traders focusing on an upcoming Federal Reserve policy-setting meeting, which is likely to set the tone in the foreign exchange markets into the fourth quarter.
At 04:10 ET (08:10 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% higher to 97.175, having fallen over 10% so far this year.
Dollar awaits Fed decision
The Federal Reserve concludes its latest two-day policy meeting on Wednesday, and is widely expected to cut interest rates after recent data showed a sustained deterioration in the U.S. labor market, while inflation in August did not rise as sharply as markets were fearing.
Markets are pricing in a 96.4% chance the Fed will cut rates by 25 basis points during its September 16-17 meeting, and a 3.6% chance for a 50 bps cut, CME Fedwatch showed.
“We see the dollar staying gently offered into the meeting, and it could sell off a little further should a 50bp cut at the meeting prove a closer call than most expect,” said analysts at ING, in a note.
Beyond the Fed meeting, the week also includes the release of August retail sales data on Tuesday and weekly jobless claims and July Treasury International Capital data on Thursday.
“Last week’s jump in jobless claims briefly hit the dollar, and the TIC data will be scrutinised for any signs that foreign investors are not just hedging U.S. assets, but outright selling them,” ING added.
French political uncertainty weighs on euro
In Europe, EUR/USD traded just lower at 1.1732, with the single currency struggling to take advantage of U.S. dollar weakness given the ongoing French political uncertainty, particularly following the late Friday decision by Fitch to downgrade French debt by one notch to A+.
Locally, the focus is on how quickly, if at all, new French Prime Minister Sebastien Lecornu can focus the minds of a disparate National Assembly on the unpopular but essential path of fiscal consolidation.
“Expect FX market players to keep one eye on French debt, even though our core view is that this is not going to broaden into another eurozone crisis,” ING added.
GBP/USD traded 0.2% higher to 1.3582, with sterling gaining ahead of Thursday’s Bank of England policy meeting.
The BoE cut interest rates last month for the fifth time in just over a year, but is widely expected to hold still later in the week with inflation at 3.8% in July, the highest in the Group of Seven advanced economies and almost twice the U.K.’s central bank’s medium-term target.
That said, data released late last week showed U.K. growth stagnated in July following a relatively robust first half of 2025.
Yuan weakens after data deluge
Elsewhere, USD/JPY slipped 0.1% to 147.48, in holiday-impacted trade with Japan celebrating “Respect for the Aged” day.
USD/CNY traded marginally lower to 7.1233, as weak Chinese economic data continued to pile up. Industrial production and retail sales both grew less than expected in August, as did fixed asset investment.
China’s unemployment rate also unexpectedly grew to 5.3% in August, data showed on Monday. The prints followed weak inflation data from last week, which showed Chinese disinflation remaining squarely in play.
AUD/USD traded 0.2% higher to 0.6662, adding to last week’s gains when the Aussie dollar was a standout performer, benefiting from rising commodity prices.