Currency Crunch: Global Markets Eye U.S. Economic Data

The dollar reached a three-month high, influencing global currencies amid expectations regarding U.S. economic data. Interest rate differentials affected the yen, while the euro and sterling faced pressures. Investors await key data releases and central bank decisions, including ADP employment data, ISM PMIs, and the Bank of England's policy decision.

The dollar remained strong on Monday, marking its highest point in three months, as investors held out for this week's crucial U.S. economic data. Their focus is on determining whether this could influence the Federal Reserve's hawkish monetary stance. Meanwhile, the yen hit an 8-1/2-month low, weighed down by significant interest rate differentials between the U.S. and Japan.

Asian currency trading was subdued, primarily due to a Japanese holiday, keeping most currencies relatively stable yet close to recent lows against a robust dollar. The euro experienced a decline to a three-month trough, trading last at $1.1536, while sterling decreased by 0.19% to $1.3145 ahead of the Bank of England's anticipated steady interest rates.

The pound suffered additional pressure from political challenges facing British Finance Minister Rachel Reeves and investor concerns about the implications of her November budget for the economy. The looming U.S. government shutdown threatens to delay the nonfarm payrolls report, but investors remain vigilant for upcoming data such as ADP employment statistics and ISM PMIs for economic insights.

(With inputs from agencies.)