Dollar weakens as markets brace for key data

The US dollar extended its slide on Monday, trading near multi-week lows, as investors positioned ahead of a heavy data calendar.

With the Labour Day holiday keeping activity subdued, traders looked toward the August employment report and related labour market releases that could determine the Federal Reserve’s next move.

On the political front, a federal appeals court ruled that most of President Trump’s reciprocal tariffs are illegal, granting the administration until mid-October to appeal. The legal ambiguity could paint a bearish scenario for the currency as uncertainty increases.

The legal battle over Fed Governor Lisa Cook’s dismissal has also cast a shadow over central bank independence, amplifying concerns that political influence could weigh on credibility.

Monetary policy expectations remain in focus. Futures markets assign a high probability to a 25-basis-point cut at the September meeting, while uncertainty over labour data persists.

Looking ahead, all eyes are now on Tuesday’s ISM Manufacturing PMI, followed by JOLTs job openings, ISM Services PMI, and Friday’s nonfarm payrolls and unemployment rate. Any downside surprises in employment data could reinforce expectations of aggressive easing, weighing down on yields and the greenback. Conversely, stronger figures may temper rate-cut bets and provide temporary support.