U.S. dollar weakens as Fed officials set to speak this week

The U.S. dollar snapped a three-day rising streak on Monday, as investors await comments from Federal Reserve officials to better gauge the monetary policy outlook after the central bank resumed its easing cycle last week.

The dollar hovered near levels seen before last week’s Fed decision. The current pricing is consistent with the central bank’s messaging, which highlighted rising concerns over the U.S. labour market as the key driver of policy, analysts said.

Last week’s U.S. economic data showed the number of Americans filing new applications for unemployment benefits fell, reversing the prior week’s jump.

“The lack of significant data until Friday’s core Personal Consumption Expenditures (PCE) inflation release leaves investors open to rethinking Fed rate cuts and the plan ahead,” said Bob Savage, head of markets macro strategy at BNY Mellon.

“Fed speakers will be important, with over 18 events planned,” he added, mentioning Chair Jerome Powell, but also the Cleveland Fed’s Beth Hammack and the St. Louis Fed’s Alberto Musalem given their hawkish view prior to the Fed meeting.

New Fed Governor Stephen Miran on Friday defended himself as an independent policymaker after dissenting in favor of a steeper 50-basis-point rate cut, and promised to give a detailed argument for his views in a speech later on Monday.

Analysts suggested that Miran’s lone dissent was a calculated move by the rest of the FOMC to show unity behind Chair Powell and reinforce the Fed’s institutional independence.

U.S. President Donald Trump criticized the Fed, urging the central bank to cut interest rates more aggressively.

The dollar was slightly lower after last week’s rebound when the Fed signaled little urgency to ease its policy in the coming months. It was down 0.23 per cent at 97.43 against a basket of currencies.

The euro was up 0.30 per cent at US$1.1783.

The Swedish crown rose 0.22 per cent to 9.3790 versus the dollar before the central bank policy meeting on Tuesday.

“If delivered, this will most likely be the final rate cut of this cycle for the Riksbank, in our view,” said Giada Giani, economist at Citi.

The yen rose a modest 0.05 per cent to 147.85 per dollar, after last week’s hawkish shift in the Bank of Japan’s rhetoric, which fueled speculation of a near-term rate hike but failed to support the currency.

Analysts said that one factor contributing to the Bank of Japan’s current caution over further rate hikes was political uncertainty ahead of the Liberal Democratic Party leadership election scheduled for Oct. 4.

“We have revised up our end 2025 dollar/yen forecast from 130 to 143,” said Arend Kapteyn, economist at UBS.

“The dollar downside is likely to be mostly driven by the U.S. rates cycle and a potential souring of global risk sentiment,” he added.

Sterling rose against the dollar on Monday as investors paused following Friday’s selloff driven by fiscal concerns.

The pound was up 0.25 per cent at $1.3502, after hitting a two-week low of $1.3453 early in the session.

Elsewhere, the Australian dollar rose 0.10 per cent to $0.6596, after hitting $0.6575, its lowest level since Sept. 8.

(Reporting by Stefano Rebaudo; Editing by Jamie Freed, William Maclean and Jane Merriman)