Dollar Falls Ahead of Tuesday's US Payrolls Report

Group 1 - The dollar index (DXY00) fell by -0.09% on Monday, with modest losses ahead of the US Nov payrolls report [1] - The Dec Empire manufacturing survey unexpectedly contracted by -22.6 points to -3.9, weaker than the expected 10.0, indicating a dovish factor for Fed policy [3] - Fed Governor Stephen Miran stated that the Fed's policy stance is unnecessarily restrictive on the economy, citing a benign inflation outlook and labor-market warning signs [3][4] Group 2 - The Fed is boosting liquidity in the financial system by purchasing $40 billion a month in T-bills, which is putting additional pressure on the dollar [2] - Concerns about President Trump's potential appointment of a dovish Fed Chair are also negatively impacting the dollar, with Kevin Hassett seen as the most likely candidate [2] - The markets are currently pricing in a 22% chance that the FOMC will cut the fed funds target range by 25 basis points at the January 27-28 meeting [4] Group 3 - The EUR/USD rose by +0.09% to a 2.5-month high, supported by the weakness in the dollar and positive economic news from the Eurozone [5] - Eurozone's Oct industrial production rose by the most in 5 months, which is bullish for the euro [5] - Divergent central bank policies are providing support for the euro, as the Fed is expected to continue cutting interest rates while the ECB has likely finished its rate-cutting campaign [5]