Dollar's Ascent Amid Fed Caution Sparks Global Currency Shifts

The dollar soared to a three-month peak against major currencies on Monday in anticipation of imminent U.S. economic data. This move underscores the Federal Reserve's cautious approach after last week's expected interest rate cut of 25 basis points, which may be the year's final adjustment, Chairman Jerome Powell indicated.

With the U.S. government shutdown likely delaying major data releases, investors are left analyzing ADP employment figures and ISM PMIs. Meanwhile, a number of Federal Reserve officials expressed discomfort with the recent policy easing. Current market analysis shows a 68% probability of another rate cut in December, highlighting a shift from earlier expectations.

Pressure mounts on other currencies as well; the yen approaches intervention-trigger levels despite Japan's signals of a rate hike. The euro and pound saw declines against the dollar, with the latter also potentially influenced by the Bank of England's possible rate cut. Global currency markets remain on edge amid these fluctuating dynamics.