Markets Balance Dollar Uncertainty with Equity Optimism Ahead of Key US Data

Welcome to this week’s Wednesday London Session Brief.

The trading week begins with investors focused on a significant run of US economic data, including Non-Farm Payrolls (NFP), JOLTS job openings, ISM Manufacturing, and PCE inflation. While the US dollar has strengthened in recent weeks following a hawkish repricing of Federal Reserve expectations, momentum appears to be slowing, creating the potential for tactical counter-trend opportunities. Meanwhile, equity markets continue to benefit from supportive seasonality, subdued volatility, and persistent dip-buying interest.

This week’s macro backdrop is dominated by high-impact US economic releases, with Friday’s Non-Farm Payrolls report representing the key event risk. After an extended period of dollar appreciation driven by expectations of a more hawkish Federal Reserve, markets are beginning to assess whether further gains can be sustained without additional evidence supporting tighter monetary policy.

Although the broader dollar trend remains constructive, near-term price action appears less directional. This could allow for periods of short-term dollar weakness before the prevailing trend potentially resumes.

Risk sentiment across equity markets also remains broadly constructive despite ongoing geopolitical developments.

Key themes shaping today’s outlook include:

• Non-Farm Payrolls, JOLTS, ISM Manufacturing, and PCE inflation dominate the macro calendar.

• The US dollar enters the week showing signs of indecision following its recent rally.

• Lower market volatility continues to provide a supportive backdrop for risk assets.

• Expectations of a resilient US labour market continue to underpin equity sentiment.