The US dollar continued to see some volatility ahead of new economic data and Federal Reserve speeches.
While Federal Reserve Chairman Jerome Powell is scheduled to speak, his comments might not affect the strength of the dollar and any resulting volatility is not expected to significantly disrupt its momentum.
At the same time, the US Congress has passed a temporary stopgap funding bill, averting a government shutdown by extending the previous budget until November 17, removing traders’ concerns on this matter.
On the economic front, the anticipated ISM Manufacturing PMI for September suggests a continued contraction in the US manufacturing sector. However, a stronger-than-expected figure could bolster the USD in particular if it surpasses the 50-point threshold.
The euro remained on a downward trend, reflecting investors’ reaction to weaker-than-expected inflation, recession risks, along with the changing European Central Bank’s stance.
Last week’s data revealed that September’s inflation slowed more than anticipated to 4.3%, the lowest since October 2021, though still above the ECB’s 2% target. PMI data also indicated ongoing contraction in the Eurozone’s manufacturing sector in Q3 signaling a more bearish outlook for the Euro.
Meanwhile, the yen could continue to see some uncertainty as it hovers around the 149.80 level against the dollar. The market could continue to see risks of an intervention from the Bank of Japan to support its currency if the pair surpasses the 150.00 value in a significant manner.
Japan’s Chief Cabinet Secretary Hirokazu Matsuno has expressed vigilance over FX movements, heightening the concerns over the likelihood of an intervention.