In the week ahead: ISM Manufacturing, Non-Farm Payrolls, Unemployment Rate

The euro advanced on Monday, with EUR/USD rising more than 0.20% during a subdued session as U.S. markets remained closed for the Labor Day holiday. A softer U.S. dollar and growing expectations that the Federal Reserve will deliver a rate cut at its September meeting underpinned the pair.

Trading was subdued as investors digested last week’s developments, including the dismissal of Fed Governor Lisa Cook alongside fresh U.S. inflation and growth data. Adding to the political backdrop, President Donald Trump said India is considering tariff reductions but criticized the timing, saying, “It’s getting late, and they should have done so years ago.”

Meanwhile, U.S. Treasury Secretary Scott Bessent said in an interview with the Washington Examiner that Trump could declare a national housing emergency this fall in response to rising prices and limited supply.

Attention now turns to Friday’s U.S. Nonfarm Payrolls report and ISM Manufacturing PMI, which will provide further insight into labor market conditions and economic momentum.

In Europe, markets are focused on the upcoming French no-confidence vote on September 8, where Prime Minister François Bayrou is widely expected to lose. On the data front, the eurozone’s HCOB Manufacturing PMI for August printed at 50.7, slightly above expectations of 50.5, marking a second consecutive month of expansion. However, Germany’s PMI remained below the key 50 threshold at 49.8, though it reached its strongest level in over three years.

ECB President Christine Lagarde reiterated the central bank’s commitment to tackling inflation, warning that global financial stability could be at risk if President Trump were to dismiss Fed Chair Jerome Powell. She also stressed that France does not require IMF intervention despite political headwinds.

Gold prices climbed for a sixth consecutive session on Tuesday, hitting a fresh all-time high during Asian trading as expectations of a Federal Reserve rate cut this month fueled strong demand for the non-yielding asset. Ongoing geopolitical tensions and uncertainty surrounding U.S. trade policy further underpinned the safe-haven metal.

Expectations of Fed easing continue to drive bullion higher, with markets largely pricing in a rate cut at the September meeting. Political uncertainty has added to the backdrop, after U.S. Treasury Secretary Scott Bessent defended President Donald Trump’s decision to dismiss Fed Governor Lisa Cook over allegations of mortgage fraud. Trump has also stepped up criticism of Fed Chair Jerome Powell for not moving faster on rate cuts, raising concerns about central bank independence.

Meanwhile, a U.S. federal appeals court ruled Trump’s reciprocal tariffs illegal, with the president vowing to take the case to the Supreme Court. The ruling adds to policy uncertainty, bolstering safe-haven demand.

On the geopolitical front, renewed escalation in both the Russia-Ukraine conflict and Middle East tensions has further strengthened bullion’s appeal as a hedge.

Investors are now turning their attention to a series of U.S. macro releases this week, beginning with Tuesday’s ISM Manufacturing PMI. The economic calendar also includes JOLTS Job Openings on Wednesday, ADP employment data and ISM Services PMI on Thursday, and culminates with Friday’s Nonfarm Payrolls report. These releases will provide crucial signals for the Fed’s policy path and gold’s near-term trajectory.

Oil prices rose on Monday, supported by supply concerns from escalating Russia-Ukraine airstrikes and a weaker U.S. dollar that boosted demand from holders of other currencies.

Tensions in Eastern Europe remain a key driver. Ukrainian President Volodymyr Zelenskiy pledged retaliation after Russian drone strikes targeted power facilities, while ordering fresh strikes inside Russia. The intensifying conflict has raised concerns over Russian crude flows, with weekly exports from its ports dropping to a four-week low of 2.72 million barrels per day.

The dollar hovered near a five-week low, making oil cheaper for non-dollar buyers. Meanwhile, Chinese manufacturing expanded at the fastest pace in five months in August, according to a private-sector survey, offering a demand-side boost to oil and other commodities.

Investors are also watching developments in Beijing, where Chinese President Xi Jinping, Russian President Vladimir Putin, and Indian Prime Minister Narendra Modi are attending a regional summit.

Markets are awaiting the September 7 OPEC+ meeting, where producers are set to decide whether to continue raising output targets. Analysts warn that rising supply and stock builds could pressure prices in coming months.

U.S. stock index futures slipped slightly on Monday evening, with trading volumes muted by the Labor Day holiday, as investors weighed legal challenges to President Donald Trump’s trade tariffs and lingering uncertainty over the Federal Reserve’s policy path.

Market sentiment was clouded by a ruling from the U.S. Court of Appeals for the Federal Circuit, which determined that most of Trump’s tariffs were illegal, noting that only Congress has the authority to impose such levies. The president vowed to challenge the decision at the Supreme Court.

While a reversal could ease fears of tariff-related economic disruptions, it also raises uncertainty over existing trade deals, which may need to be renegotiated. Trump’s tariffs, implemented in August, imposed duties ranging from 10% to 50%, much of which are expected to be passed on to U.S. importers, potentially keeping inflation elevated.

Adding to investor unease, Fed Governor Lisa Cook said she would pursue legal action following Trump’s attempts to remove her from the central bank, intensifying concerns about Fed independence.

On the corporate front, earnings remain on the radar this week, with reports due from Zscaler, Salesforce, Broadcom, and Dollar Tree.