Global currency markets began the week cautiously, with the dollar edging slightly higher against the euro, yen, and sterling as traders adjusted their positions ahead of what is expected to be a busy week, with U.S. economic data set to return after a long pause.

Market reaction was limited after U.S. President Donald Trump reversed his decision to impose tariffs on more than 200 food products, with some analysts noting that the move was not surprising given the pressure the tariffs had placed on living costs.

Market attention this week will center on a series of U.S. economic releases that may offer signals on the health of the worlds largest economy, including the September nonfarm payrolls report due Thursday.

Despite further signs of weakness in the U.S. economy based on recent private-sector data, investors reduced their expectations for a rate cut next month, suggesting that the gaps in economic data could slowor even hinderfurther monetary easing.

Markets are now pricing a little over a 40% probability of a 25-basis-point rate cut in December, compared with more than 60% earlier in the month.

In a Weekly Outlook note, currency strategists at Goldman Sachs warned that this weeks upcoming datadespite its importancemay not be the most informative. The note stated: Although the government shutdown has ended, it will naturally take some time before the data becomes relevant again. For example, Thursdays jobs report offers a snapshot from two months ago, and is therefore unlikely to settle any debate about the economic outlook.

Over the medium term, the banks analysts expect upcoming data to show enough downside risks facing the labor market to resolve the ongoing debate within the FOMC, adding that such developments would be negative for the dollar.

Market moves remained limited on the eve of the data. The euro fell 0.2% against the dollar to 1.5977 dollars, while the pound slipped slightly to 1.3168 dollars and the yen edged marginally lower to 154.73 per dollar.

Yen Under Watch

The yen showed little reaction to Mondays data, which indicated that Japans economy contracted at an annualized rate of 1.8% over the three months to September, driven by falling exports under U.S. tariffs and marking the first contraction in six quarters.

Even so, the yen remains near its weakest level in nine months against the dollar, keeping traders alert to the possibility of Japanese authorities intervening to slow the currencys decline. Japan last intervened in July 2024 when the yen fell to its lowest level in 38 years at around 161.96 per dollar, after the weaker currency caused a sharp rise in food and fuel prices.

As for the British pound, despite its relative stability on Monday, it remained a focal point for FX traders after a volatile session on Friday amid rising speculation surrounding the upcoming November 26 budget. This sensitivity is expected to continue, with the pound also likely to react to UK economic data this week, particularly monthly inflation figures.

Septembers inflation reading, which came in below expectations, had prompted markets to adjust their outlook on Bank of England policy, causing the pound to weaken when the data was released last month.

The Swiss francseen as a safe havenpulled back from the one-month high it hit last week, settling at 0.7954 per dollar after benefiting from last weeks global market turmoil. It also stood at 0.7948 against the euro, slightly below the more-than-ten-year high it reached last week.