The US Dollar is gaining strength, thanks to last week’s positive trends, according to BBH FX analysts. This week’s private-sector data will shed light on employment and inflation. Strong labor data could further increase the USD, while weak data might lead to a slight pullback. The spotlight is on the US October ISM manufacturing data, set to release at 3:00 PM London time (10:00 AM New York time). Analysts expect the headline index to rise to 49.5 from 49.1 in September, showing a slower contraction. Key areas to watch are the prices paid and employment sub-indexes, as they can indicate easing inflation risks and job losses.

Federal Reserve Insights

Fed Governor Lisa Cook will talk about the economy and monetary policy at 7:00 PM London time (2:00 PM New York time). This follows a discussion featuring San Francisco Fed President Mary Daly at 5:00 PM London time (12:00 PM New York time). Fed Chair Jay Powell has expressed a preference for not cutting interest rates, a sentiment shared by Dallas Fed President Lorie Logan and Cleveland Fed President Beth Hammack, both of whom argued to keep rates steady last week. FXStreet strives to deliver timely market insights, aware of how quickly markets can change and the potential risks involved. The views shared reflect the authors’ opinions; FXStreet does not provide investment advice or guarantee accuracy. As of today, November 3rd, 2025, the US Dollar is strong, and we expect this trend to face challenges with upcoming data. This week’s private-sector reports are vital for assessing labor market and inflation health. Positive numbers could lift the dollar, while weaker results may lead to a brief decline. The October ISM manufacturing report reveals a slower contraction than last month, with a headline figure of 49.8. More notably, the prices paid sub-index shot up to 52.0, the highest since July 2025. This suggests that inflation pressures are not easing as quickly as anticipated, supporting the more cautious voices within the Federal Reserve.

Market Strategies

There is a rising divide within the Fed regarding interest rate decisions. Currently, there’s a 60% chance of a rate cut by January 2026, but many Fed officials are advocating for steady rates. The speeches from Fed Governors Cook and Daly today will be closely monitored for any changes in tone, especially following political pressure from the administration in August 2025. Given this uncertainty, we recommend that derivative traders consider buying volatility. The VIX index, which tracks expected market volatility, has climbed from 16 to 19 in the past month. We are preparing for a possible hawkish surprise by purchasing out-of-the-money call options on the US Dollar Index for early 2026. The next significant event is the October non-farm payrolls report this Friday. Economists predict an increase of around 150,000 jobs, reflecting moderate job growth similar to October 2023. A significantly higher number could force markets to reassess the likelihood of a rate cut, pushing the dollar even higher. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now