Highlights:

– The U.S. dollar slipped as global traders resumed activity following the Labor Day break.
– Market focus shifts to upcoming U.S. economic data, including inflation and jobs reports.
– Investors weigh Fed policy outlook as risk appetite strengthens across equities and commodities.

The U.S. dollar opened the week on weaker footing as global markets reopened in full swing after the Labor Day holiday in the United States. Renewed trading volumes amplified movements across currencies, with the greenback losing ground against major peers as investors assessed upcoming macroeconomic data and the Federal Reserve’s policy trajectory.

Renewed Risk Appetite Pressures the Dollar

The return of full market participation has reinforced demand for risk assets, pressuring the dollar’s traditional safe-haven appeal. The euro and British pound both edged higher, supported by stronger regional data, while commodity-linked currencies such as the Australian and Canadian dollars benefited from firmer energy and metals prices. In Asia, the Japanese yen remained subdued, reflecting the Bank of Japan’s continued divergence from global tightening cycles.

The dollar index, which measures the U.S. currency against a basket of peers, extended its decline, signaling renewed appetite for diversification as investors look toward equities and emerging market assets. Traders have also been adjusting positions after the summer lull, with many recalibrating exposure ahead of key data releases.

U.S. Economic Data in Focus

This week’s U.S. economic calendar is pivotal for market sentiment. Inflation and employment figures are expected to guide expectations for the Federal Reserve’s next steps. While Fed officials have signaled caution in recent weeks, persistent inflationary pressures could limit the scope for near-term policy easing.

The labor market remains particularly critical, with investors watching whether cooling employment data signals a sustainable rebalancing of the U.S. economy or raises concerns about growth momentum. Treasury yields have been volatile in anticipation, adding to cross-asset uncertainty and influencing currency market flows.

Global Market Context and Israeli Perspective

Global equity markets opened on a positive note, with Asian and European indices trading higher on Tuesday. Strength in risk assets, particularly in cyclical sectors, has weighed further on the dollar. Commodity markets also provided support for currencies linked to resource exports, creating headwinds for the greenback’s dominance.

For Israeli investors, the shekel’s performance against the dollar remains closely tied to U.S. macro data and Federal Reserve policy expectations. The Bank of Israel continues to navigate between domestic inflation control and external currency pressures, making dollar-shekel dynamics a critical variable for institutional and retail market participants.

As global capital flows resume at full pace post-holiday, Israeli portfolios remain exposed to the dollar’s trajectory, particularly given Israel’s significant trade and technology ties with the U.S.

The coming days will test whether the dollar’s recent weakness extends or stabilizes. Much depends on U.S. data releases and whether the Federal Reserve signals greater clarity on its policy outlook. For now, investors are tilting toward risk assets, leaving the dollar under pressure as global trading momentum returns.