Volatility persists amid expectations of monetary policy easing by the Federal Reserve at the September 17 meeting, following labor market data confirming a slowdown. In August, nonfarm payrolls dropped from 79,000 to a low of 22,000, well below analysts’ estimates of 75,000, while unemployment rose from 4.2% to 4.3%. As a result, expectations for a 50-basis-point rate cut reached 10%, according to CME FedWatch Tool, although such a scenario was not previously considered.

Eurozone

The euro is strengthening against the U.S. dollar but weakening versus the pound and yen.

Neutral performance comes amid macroeconomic data: in Germany, July exports fell from +1.1% to –0.6%, imports slowed from +4.1% to –0.1%, and the trade surplus declined from €15.4 billion to €14.7 billion, below the €15.7 billion forecast. On Thursday at 14:15 (GMT+2), the European Central Bank (ECB) will announce its monetary policy decision. Analysts expect the key rate to remain at 2.15%, which could apply mild pressure on the euro.

United Kingdom

The pound is strengthening against the U.S. dollar and euro but losing ground versus the yen.

Sterling is under pressure amid uncertainty over fiscal policy. Investors doubt Finance Minister Rachel Reeves will uphold her pledge to maintain discipline and cut spending in the upcoming November budget. Concerns are mounting about potential tax hikes that could slow the economy. On the other hand, the pound was supported by Friday’s retail sales report: the core index rose 0.5% in July, while total sales gained 0.6%, beating forecasts of 0.4% and 0.3%.

Japan

The yen is gaining against the pound, euro, and U.S. dollar.

Strength comes despite potential political instability after Prime Minister Shigeru Ishiba resigned following the Liberal Democratic Party’s poor showing in July’s parliamentary elections. Sanae Takaichi, known for her dovish stance, is seen as the leading candidate to succeed him, though analysts doubt such a choice, as most factors point to monetary tightening. Following her mention, the probability of a Bank of Japan rate hike in September fell to 20%, down from 46% last week.

Australia

The Australian dollar is rising against the pound, euro, yen, and the U.S. dollar.

The currency is recovering after a morning correction triggered by weak construction data. In July, non-residential building approvals in the private sector dropped 22.3% to 5,943, while residential approvals fell 1.1% to 9,288. Total construction value declined 14.9% to AUD 6.09 billion for non-residential and 1.6% to AUD 9.43 billion for residential. Despite this, total housing approvals fell 8.2% month-on-month to 15,769 but rose 6.6% year-on-year, maintaining a positive long-term trend.

Oil

Oil prices are attempting to rebound to $67.00 after eight countries pledged to increase voluntary output cuts by 137,000 barrels per day in October, on top of the previously agreed 2.2 million bpd reduction.

Production changes include Russia and Saudi Arabia (+42,000 bpd each), Iraq (+17,000 bpd), UAE (+12,000 bpd), Kuwait (+11,000 bpd), Kazakhstan (+6,000 bpd), Algeria (+4,000 bpd), and Oman (+3,000 bpd). As a result, OPEC+ will fully exit production limits by year-end — 12 months earlier than planned. The statement highlighted stable global economic prospects and favorable market conditions, which do not require further intervention in the oil market.