The U.S. dollar is on the defensive ahead of tomorrow's Federal Reserve decision, with rising expectations of a 50-basis-point rate cut. The dollar has weakened against most major currencies, showing little relief. While Japan's markets have reopened after a long holiday weekend, the dollar is still holding above JPY 140. It is consolidating, but losses have extended against most G10 currencies. The Canadian dollar is a notable exception, driven by speculation that the Bank of Canada could quicken its rate cuts, barring any surprises from today’s August CPI report.
Global equities are mostly trading higher. Gold, after reaching a record high just shy of $2,590 yesterday, is consolidating lower. November WTI crude oil is also consolidating near the upper end of yesterday's range after hitting a seven-day high around $69.60.

Asia Pacific Markets
In Asia, Chinese and South Korean markets remain closed, but Japan has resumed trading after the holiday.
The dollar has stabilized against the yen after briefly dipping below JPY 139.60 yesterday when several regional markets were closed. The Australian dollar reached a high of nearly $0.6770 today, slightly surpassing the peak set on September 6.

European Markets
The eurozone is not in the spotlight this week. After a minor dip on headlines, the euro quickly recovered. In the UK, all eyes are on tomorrow’s August CPI report and the Bank of England's (BOE) meeting on Thursday. Norway’s central bank also meets on Thursday. Neither bank is expected to cut rates, but given the unexpected economic stagnation in the UK during June and July, a surprise from the BOE cannot be ruled out.
The euro broke through the downtrend line formed by the late-August and September 6 highs. The British pound recently hit a two-year high near $1.3265, with the September 6 peak at $1.3240. Initial support may be found around $1.32.

American Markets
It’s a busy day for U.S. economic data ahead of the Federal Open Market Committee (FOMC) meeting conclusion on Wednesday. Softer auto sales and lower gasoline prices may have weighed on the headline retail sales figure, following July’s 1% jump. Core retail sales likely held up better. However, consumer spending appears to have slowed in Q3 compared to Q2’s 2.9% annualized growth rate. Industrial production and manufacturing output are expected to have partially rebounded from July’s decline, while business inventory data for July is also due.