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Dollar rise to 3-month high vs euro

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US manufacturing contracts further in October

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Focus on private data releases as shutdown drags on

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Markets alert to more jawboning from Tokyo

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Rate decisions from BoE, RBA due this week

(Updates to U.S. morning)

By Saqib Iqbal Ahmed

NEW YORK, Nov 3 (Reuters) - The dollar edged up to a

three-month high against the euro on Monday, extending its gains

from last week on doubts about the outlook for another Fed rate

cut this year.

The Federal Reserve lowered interest rates by 25 basis

points last week, as expected, but Chair Jerome Powell signalled

that may be the last cut this year, citing the risk of making

additional moves without a more robust picture of the economy.

Were it not for the ongoing U.S. government shutdown, data

releases scheduled for this week, including U.S. non-farm

payrolls, would have helped with that picture.

With government releases likely to be delayed again,

investors will be left with ADP employment data and ISM PMIs,

though it seems unlikely these will move the dial significantly.

'QUITE A BIT OF DOUBT' ABOUT DECEMBER RATE CUT

"There was quite a bit of doubt cast on the likelihood of a

follow-up December rate cut," said Shaun Osborne, chief currency

strategist at Scotiabank.

A number of Fed bank presidents on Friday aired their

discomfort with the decision to ease policy, while Federal

Reserve Governor Stephen Miran on Monday argued for being more

aggressive with rate cuts.

"I don't recall, in all the years of watching these markets,

public division among Fed policymakers as significant as this on

the policy outlook," Osborne said.

Traders are now pricing in a roughly 70% chance of a 25 bp

cut in December, down from about 94%, a week ago.

EURO HITS WEAKEST VS DOLLAR SINCE AUGUST

The euro, which slipped as low as $1.1505 against the

dollar, its weakest since August 1, pared losses to trade down

0.1% at $1.1518, after data showed U.S. manufacturing contracted

for an eighth straight month in October as new orders remained

subdued, and suppliers were taking longer to deliver materials

to factories against the backdrop of tariffs on imported goods.

The dollar was up 0.37% to 0.8075 Swiss francs, its highest

since mid-August.

The yen was about unchanged on the day against the

dollar, languishing near an 8-1/2-month low, pressured by wide

interest rate differentials.

Still there remained risks to the dollar, including the U.S.

government shutdown that has disrupted the supply of government

data crucial to gauging the strength of the economy.

"I don't think it is guaranteed that the dollar continues to

strengthen," Osborne said.

POUND, YEN FACE THEIR OWN PRESSURES

For now, the pound and the yen face their own pressures.

Even though Bank of Japan Governor Kazuo Ueda last week sent

the strongest signal yet that a rate hike was possible as soon

as December, markets remained underwhelmed by the central bank's

gradual approach, particularly given that the Fed has turned

more hawkish.

That has piled pressure on the yen, prompting jawboning from

Japanese authorities to stem the currency's slide.

The yen is approaching levels at which Japanese authorities

intervened in markets in 2022 and 2024 to support the currency.

Sterling has softened as market expectations of another Bank

of England rate cut this year increased after

softer-than-expected inflation data released last month. On

Monday, the pound was 0.3% lower at $1.31295.

The BoE meets this week, with some analysts predicting a 25

basis point cut, though market pricing only reflects a one in

three chance of this occurring.

The Aussie slipped 0.2% to $0.6533. The currency has

found some support from expectations that the Reserve Bank of

Australia will hold rates on Tuesday, following an uncomfortably

high reading of core inflation.

Cryptocurrency bitcoin was down 2% at $107,486.