The foreign exchange market started the new week on a cautious note, with the U.S. dollar grinding higher against the euro and yen as traders prepared for the long awaited return of official economic data from Washington. With the shutdown finally over, investors are bracing for a backlog of releases, culminating in the September nonfarm payrolls report that will land later this week and help reset the debate around the next Federal Reserve move.

Why this matters for FX
Private surveys have already signalled further cooling in the U.S. economy, but the lack of hard numbers has left rate expectations drifting. Futures markets now see a smaller chance of a Fed rate cut in December than just a few weeks ago, arguing that policymakers may want to see a few clean data prints before easing again. That leaves the dollar caught between softer fundamentals and the prospect that data surprises could still squeeze short positions if the numbers come in hotter than feared.

Yen and the risk of intervention
The latest figures from Japan showed the economy shrinking for the first time in six quarters as exports sagged under the weight of U.S. tariffs. Even so, dollar/yen stayed pinned near a nine month high, keeping traders on alert for the possibility of fresh verbal or outright FX intervention from Tokyo. Officials have stepped in before when yen weakness fuelled a painful jump in import prices, so any sharp push beyond recent highs could quickly test their tolerance again.

Sterling, franc and trade ideas
Across the Channel, sterling is treading water ahead of the November 26 UK budget and another key inflation print. A cooler than expected CPI release last month briefly rewired Bank of England expectations and reminded traders how quickly the pound can reprice when the data pulse changes. The Swiss franc, meanwhile, has eased back from recent highs as equity markets stabilise, but it remains a popular hedge when risk sentiment wobbles.

For short term FX desks, the near term playbook is simple: expect range trading until the first big data drops hit the tape, then be ready for volatility as markets recalibrate Fed and BoE paths. Medium horizon investors may prefer to fade dollar strength into upbeat prints, on the view that a softer labour market and slower global growth will eventually drag yields and the greenback lower into 2026.