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Dollar consolidates gains ahead of Fedspeak

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The US Dollar Index rose more than 2% in the previous week and registered its largest one-week gain of 2024. The index remains in a consolidation phase at around 102.50 in European trading on Monday.

Later in the day, Eurostat will publish Retail Sales data for August. In the second half of the day, Consumer Credit Change for August will be the only data featured in the US economic docket. During U.S. trading hours, several Federal Reserve policymakers, including Governor Michelle Bowman, will be delivering speeches.

The USD benefited from the upbeat employment data for September on Friday and continued to outperform its major rivals heading into the weekend.

The Bureau of Labor Statistics reported that nonfarm payrolls (NFP) rose by 254,000 in September, surpassing the market expectation of 140,000 by a wide margin. Additionally, the Unemployment Rate edged lower to 4.1%, from 4.2% in the same period.

EURUSD extended its weekly downtrend on Friday and touched its lowest level since mid-August near 1.0950. The pair struggles to stage a rebound in early European trading on Monday and remains below 1.1000.

GBPUSD fell below 1.3100 with the immediate reaction to the US labour market data on Friday, but managed to erase its losses to end the day flat. The pair holds steady and moves up and down in a narrow band slightly above 1.3100 in the European morning.

In its quarterly report published on Monday, the Bank of Japan raised the assessment for two of Japan’s nine regions.

“All regions in Japan saw economy recovering moderately, picking up or picking up moderately,” the BoJ further noted. After rising more than 1% on Friday, USDJPY edges lower Monday and trades below 148.50.

Gold registered small losses in the previous week, despite the broad USD strength as the precious metal capitalised on safe-haven demand. XAUUSD stays on the back foot to start the week and trades in negative territory below $2,650.

(Source: OANDA)