By Dat Tong, Senior Financial Markets Strategist at Exness
The US dollar was relatively steady on Monday as investors looked ahead to a busy week of Federal Reserve communication following last week’s policy easing. Chair Jerome Powell and several other policymakers are scheduled to speak in the coming days, with markets attuned to any signals on the pace and scope of future cuts.
Attention could turn to Fed Governor Stephen Miran, who dissented at the September meeting in favor of a larger 50-basis-point move. His upcoming speech is expected to provide a detailed defence of his decision and could shape market sentiment on the Fed’s credibility amid heightened political scrutiny.
Later this week, economic data will also play a key role in shaping market sentiment. On Friday, the August PCE price index, the Fed’s preferred gauge of inflation, is expected to show a 0.2% monthly rise, down from 0.3% in July.
Treasury yields were broadly stable, with the 10-year holding above 4.1%, but both yields and the dollar are likely to react to the PCE outcome as well as Fed speakers this week, which together will help set the tone for October. A softer print could reinforce expectations for further easing, placing downward pressure on the currency and yields, while any upside surprise may temper the dollar’s downside risks.