Dollar Steadies as ECB Flags Risks; Swiss GDP Contracts
The US dollar opened the week slightly stronger, with currency moves tight and largely range-bound as markets weighed steady guidance from the European Central Bank and a surprise downturn in Swiss growth. Traders are also looking ahead to a busy data slate spanning the US and Canada.
Across major pairs, the greenback held a modest bid, with intraday fluctuations against the euro, yen, and Swiss franc kept within a narrow band. Sterling underperformed while commodity-linked currencies were mixed, reflecting a cautious tone in foreign exchange trading. In Switzerland, GDP unexpectedly fell 0.5% quarter-on-quarter, prompting choppy USD/CHF price action as the pair rebounded from October lows and drifted back toward short-term moving averages.
ECB officials emphasized a steady policy stance. Vice President Luis de Guindos said inflation is still converging toward target, but he highlighted persistent vulnerabilities, including the risk of abrupt market corrections, fiscal pressures, and potential deterioration in banks’ credit quality if growth weakens. Board member Klaas Knot’s colleagues—Frank Elderson and others—signaled policy is “in a good place,” while Gabriel Makhlouf underscored a meeting-by-meeting approach amid uncertainty and called out financial stability risks tied to stablecoins, advocating for robust regulation of digital-asset payment instruments.
The macro calendar will add direction in coming sessions. The US will release delayed August indicators, including construction spending, trade, and manufacturers’ orders, followed by the second estimate of Q3 GDP and the October PCE inflation report later this month, plus upcoming trade figures and November PCE in December. Canada’s CPI is due today, a key input for the Bank of Canada’s policy outlook and the Canadian dollar.
Key Points – US dollar starts the week modestly firmer with tight FX ranges across major currencies. – Swiss GDP contracted 0.5% q/q, sparking a rebound in USD/CHF toward short-term moving averages. – ECB officials say policy is appropriately positioned, with inflation still converging toward target. – De Guindos flags risks from market corrections, fiscal vulnerabilities, and bank credit quality. – Makhlouf warns on stablecoin-related financial stability risks and urges stronger regulation. – US calendar features delayed August data, Q3 GDP second estimate, October PCE; Canada CPI prints today.
