Jerome Powell, Chairman of the US Federal Reserve, will deliver the Semi-Annual Monetary Policy Report and testify before the Senate Banking Committee today. The hearing, entitled "The Semi-Annual Monetary Policy Report to the Congress," will start at 10 a.m. EST, and it will have the full attention of all financial market players. Powell is expected to address the main takeaways of the Fed's Semi-Annual Monetary Policy Report, published last Friday. In that report, the Fed noted modest further progress on inflation this year but added that they still need greater confidence before moving to rate cuts. "Labor supply and demand resemble the period right before the pandemic, when the labor market was relatively tight but not overheated," the publication read.

EUR/USD is relatively flat to start the session. The US Dollar is suffering unevenly across the board amid the persistent risk-on mood. Wall Street closed mixed on Monday, with only the Dow Jones Industrial Average (DJIA) shedding some modest ground while the S&P 500 reached an all-time high amid strength in the tech sector. The positive sentiment extended in Asia, although European indexes are trading in the red as caution takes over financial markets.

GBP/USD is down on the day and seems to be losing traction, although the bullish bias remains unchanged. The improving risk mood makes it difficult for the US Dollar to gather strength and helps GBP/USD hold its ground. At the time of writing, US stock index futures were up between 0.15% and 0.4% on the day. The current market positioning suggests that the USD has more room to fall if Powell acknowledges weak jobs data and adopts an optimistic view on the inflation outlook. On the other hand, the USD could strengthen against its peers if Powell pushes back against the market expectation for a September rate cut.

USD/CAD has edged higher to start the day. As far as Canadian data goes, its labor market seems to be suffering more than the US, as revealed in the Canadian version of the NFP report also released on Friday. This showed the unemployment rate rising to 6.4%, surpassing forecasts of 6.3% and marking its highest level since January 2022. Canadian payrolls were even worse, showing a 1.4K fall when economists had expected a 22.5K rise. The stresses in the labor market have been blamed on still-high interest rates in Canada, stymying companies' ability to access credit. This has led to further calls for the Bank of Canada to cut interest rates again, after they reduced the policy rate by 0.25% to 4.75% in June – the first change in interest rates since July 2023.