The US dollar edged higher on Monday after last week’s decline, although the currency could remain under some pressure.
Thursday’s non-farm payrolls report, which came in below expectations, triggered a decline in the dollar and Treasury yields, as markets revised their monetary policy outlook to price in only one interest rate increase before year-end.
Attention now turns to today’s PMI data. The services PMI is expected to remain in expansion territory.
Unless the data diverges significantly from forecasts, current Fed policy expectations are likely to remain unchanged. This week’s FOMC minutes could offer further clues on the path ahead and could influence the direction of the dollar.
Beyond the macro calendar, market participants will also watch geopolitical developments. Progress in talks between Iran and the United States could ease safe-haven demand for the dollar. However, caution over the next steps could support the US currency in the meantime. At the same time, markets could continue to monitor any potential interventions from the Bank of Japan.
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