Palladium prices fell during Monday’s trading despite a weaker US dollar against most major currencies, as renewed concerns over demand kept the industrial metal under pressure.

This comes amid the continued release of weak economic data from China. August figures showed that industrial production, retail sales, and fixed-asset investment all grew below expectations. The unemployment rate also rose unexpectedly to 5.3%.

These numbers followed last week’s soft inflation data, which confirmed persistent disinflationary pressures in the world’s second-largest economy, fueling further concerns about Chinese demand.

Separately, the ongoing Russia-Ukraine war continues to cast a shadow over markets, particularly metals, given that Moscow is one of the world’s largest palladium producers.

US President Donald Trump admitted on Monday that halting the Russia-Ukraine war is difficult under current conditions, noting that he was disappointed in President Vladimir Putin.

Dollar

The US Dollar Index fell 0.2% to 97.4 points by 16:03 GMT, after hitting a high of 97.7 and a low of 97.3.

Meanwhile, crypto markets are also awaiting the Federal Reserve’s decision this week, with markets pricing in a 99.6% probability of a 25 basis point rate cut, versus just 0.4% odds of keeping rates unchanged, according to CME FedWatch data.

Still, traders remain cautious about the long-term outlook for monetary easing, especially as the Fed has repeatedly warned about persistent inflation risks. Chair Jerome Powell has yet to commit to a clear path toward easing, despite mounting pressure from the White House to cut rates.

Palladium futures for December delivery dropped 3.2% to $1,210.5 an ounce by 16:04 GMT.

Bitcoin rose slightly on Monday, extending its recent gains amid growing conviction that the US Federal Reserve will cut interest rates this week.

However, most alternative cryptocurrencies declined, and emerging concerns about the long-term viability of large corporate investments in Bitcoin – which had been a major source of demand this year – limited its upside.

Bitcoin gained 0.7% to $116,527.3 by 02:01 ET (06:01 GMT), after rising about 5% last week.

Bitcoin supported by rate cut bets but caution remains

Bitcoin has recently seen a gradual recovery from the steep losses suffered between mid-August and early September.

Nevertheless, the token remains well below its August highs, weighed by profit-taking and rising doubts over the expansion of corporate treasury investments in digital assets.

These concerns intensified after Strategy (formerly MicroStrategy – NASDAQ: MSTR) was rejected for inclusion in the S&P 500, raising questions about the sustainability of the digital treasury model. Analysts at J.P. Morgan warned that the lack of further index inclusions undermines the long-term outlook for this investment approach.

This trend has left cryptocurrencies lagging behind the rally seen in other risk assets, particularly equities.

Focus on the Federal Reserve

Crypto markets are also awaiting this week’s Federal Reserve decision, with CME FedWatch data showing a 99.6% probability of a 25-basis-point rate cut, versus just 0.4% odds of no change.

Speculative assets like cryptocurrencies typically benefit from lower rates, as easier monetary policy boosts market liquidity.

Still, traders remain cautious about the longer-term path of monetary easing, with the Fed repeatedly warning of persistent inflation risks. Fed Chair Jerome Powell has yet to commit to a clear easing trajectory, despite mounting pressure from the White House to deliver cuts.

Oil prices rose on Monday as investors assessed the impact of Ukrainian drone attacks on Russian refineries, while US President Donald Trump signaled readiness to impose new sanctions on Russia if NATO countries stop purchasing Russian oil.

Brent crude futures gained 32 cents, or 0.5%, to $67.31 a barrel by 08:00 GMT, while US West Texas Intermediate rose by the same amount to $63.01 a barrel.

Russian authorities said Ukraine launched a large-scale attack late Sunday using at least 361 drones targeting Russian territory, sparking a limited fire at the massive Kirishi refinery in the northwest of the country.

Both benchmarks had recorded gains of more than 1% last week as Ukraine stepped up its attacks on Russian oil infrastructure, including Primorsk port, Russia’s largest oil export terminal.

Analysts at J.P. Morgan led by Natasha Kaneva wrote in a note: “The attack highlights a growing willingness to disrupt global oil markets, which could add upward pressure on prices,” referring to the Primorsk strike.

Primorsk port has a loading capacity of nearly 1 million barrels per day, while the Kirishi refinery processes about 355,000 barrels per day, equivalent to 6.4% of Russia’s total oil output.

IG markets analyst Tony Sycamore said: “If we are seeing a strategic shift in Ukraine’s approach to targeting Russian oil export infrastructure, that carries upside risks for price forecasts,” despite ongoing concerns about oversupply amid OPEC+ plans to increase production.

Pressure on Russia is also mounting after Trump said on Saturday that the US is prepared to impose new sanctions on the Russian energy sector, but only if all NATO members halt purchases of Russian oil and adopt similar measures.

At the same time, investors are closely watching US-China trade talks in Madrid, which began on Sunday amid US pressure on its allies to impose tariffs on Chinese imports over Beijing’s continued buying of Russian oil.

US data released last week showed a slowdown in job creation alongside rising inflation, stoking concerns about weaker growth in the world’s largest economy and biggest oil consumer.

The US dollar rose slightly on Monday, as traders await the Federal Reserve’s monetary policy meeting, which is expected to shape the outlook for foreign exchange markets during the fourth quarter of the year.

At 04:10 a.m. Eastern Time (08:10 GMT), the US dollar index – which measures the performance of the US currency against a basket of six major currencies – rose by 0.1% to 97.175, after losing more than 10% since the beginning of the year.

The Federal Reserve in Focus

The Federal Reserve is set to conclude its two-day meeting on Wednesday, where it is widely expected to cut interest rates after recent data showed a continued deterioration in the US labor market, while inflation in August did not rise as sharply as investors had feared.

According to the CME FedWatch tool, markets are pricing in a 96.4% probability of a 25 basis point rate cut at the September 16–17 meeting, and only a 3.6% probability of a larger 50 basis point cut.

Analysts at ING said in a research note: “We expect the dollar to remain under slight pressure before the meeting, and it could fall further if a 50 basis point cut appears closer than most traders currently expect.”

In addition to the Fed meeting, this week’s agenda includes the release of US retail sales data for August on Tuesday, and weekly jobless claims and July TIC data on Thursday.

ING added: “Last week’s surge in jobless claims briefly weighed on the dollar, and TIC data will be scrutinized for signs that foreign investors are not only hedging against US assets but also moving to sell them outright.”

French Political Risks Pressure the Euro

In Europe, the euro/dollar pair fell slightly to 1.1732, as the euro failed to benefit from the dollar’s weakness due to ongoing political uncertainty in France, especially after Fitch on Friday downgraded France’s sovereign credit rating by one notch to A+.

Traders are focusing domestically on whether new Prime Minister Sébastien Lecornu can unify the divided national parliament around the path of fiscal consolidation, which remains necessary despite his lack of popularity.

ING added: “We expect currency traders to monitor France’s debt profile closely, although our base case does not point to it turning into a new eurozone crisis.”

As for the pound/dollar pair (GBP/USD), it rose by 0.2% to 1.3582, supported by expectations ahead of the Bank of England’s meeting scheduled for Thursday. The bank cut rates last month for the fifth time in just over a year, but it is expected to keep policy unchanged this week as July inflation stood at 3.8%, the highest among G7 nations and nearly double the bank’s medium-term target.

However, data released late last week showed that UK growth stalled in July, after relatively strong performance in the first half of 2025.

The Yuan Falls after Weak Economic Data

In Asia, the dollar/yen pair fell by 0.1% to 147.48 in thin trading affected by Japan’s public holiday marking “Respect for the Aged Day.”

The dollar/yuan pair (USD/CNY) edged down to 7.1233, amid the continued release of weak economic data in China. August figures showed that industrial production, retail sales, and fixed asset investment all grew less than expected, while the unemployment rate unexpectedly rose to 5.3%.

These figures follow last week’s weak inflation data, which confirmed the persistence of disinflationary pressures in the world’s second-largest economy.