A federal judge signaled Friday that she will move quickly to rule on whether President Trump acted unlawfully in moving to fire Federal Reserve governor Lisa Cook. U.S. jobs data will be the highlight of the week, as investors gear up for a potential interest-rate cut by the Fed. Jobs data, alongside the latest U.S. ISM surveys on manufacturing and services, will provide key indications on how the U.S. economy is faring. Markets are increasingly anticipating that the central bank will cut interest rates at its next meeting on Sept. 17 after July’s weak jobs data and recent comments from Fed Chair Jerome Powell at Jackson Hole suggesting that such a move was possible. U.S. money markets are pricing an 84% chance of a 25 basis-point rate cut at the coming Fed meeting, LSEG data show.

Weeks before what is likely to be the Federal Reserve’s first interest-rate cut of the year, an unprecedented effort by President Trump to reshape the central bank is scrambling the dynamics on its policy committee.

In an Aug. 22 speech, Fed Chair Jerome Powell opened the door to a rate cut at the Fed’s Sept. 16–17 meeting to cushion a weaker labor market. While a quarter-point reduction from the current 4.25% to 4.5% target range still looks all but assured, the breadth of support for that cut among Fed officials, and what comes after, have been thrown into doubt.

This week, Trump moved to fire Fed governor Lisa Cook over allegations of mortgage fraud, the first time a president has tried to dismiss a governor in the central bank’s 111-year history.

Cook sued to block her removal, and initial arguments in Washington, D.C., federal district court Friday left it unclear whether Cook was still serving or would be able to vote at the September meeting.

The court fight over Cook’s position strains internal Fed unity. Cook named Powell a defendant in her suit because she wants a judge to rule that he can’t bar her from the Fed. Neither Powell nor the Fed has taken a position on the case. In court Friday, the Fed asked only that the judge, Jia Cobb, rule quickly, “to remove the existing cloud of uncertainty.”

• Judge Weighs Fed Gov. Lisa Cook’s Bid to Stop Trump From Firing Her

Bank of Japan Deputy Gov. Ryozo Himino reiterated the central bank's stance of pursuing more interest-rate increases but cautioned against tariff-related risks. "Despite the three policy interest rate hikes by the bank thus far, real interest rates have remained at significantly low levels, as inflation has stayed strong," Himino told business leaders in Japan's northern island of Hokkaido on Tuesday. The BOJ will continue to adjust the degree of monetary accommodation by raising interest rates if the economy and prices develop as projected by the bank, he said. As the U.S. and Japan have reached a trade agreement, economists and investors widely expect the BOJ to resume monetary tightening in the near term. The BOJ's next two-day policy board meeting is due on Sept. 18-19. (Dow Jones Newswires)

9:45 a.m.: US Manufacturing PMI
10 a.m.: ISM Report On Business Manufacturing PMI
10 a.m.: Construction Spending - Construction Put in Place

9:00 a.m.: PIIE hosts discussion with FRB St. Louis President Alberto Musalem (US)
1:30 p.m.: Federal Reserve Bank of Minneapolis President Neel Kashkari participates in Minnesota Women's Economic Roundtable
2 p.m.: U.S. Federal Reserve Beige Book

July PCE inflation broadly keeps June's pace, supporting bets on an interest rate cut by the Fed in September and keeping Treasury yields rising. The 12-month headline inflation is 2.6%, the same as in June. Core ticks higher to 2.9% from 2.8%. The preliminary reading was 58.6, reflecting a decline in sentiment. — Paulo Trevisani

• Canada’s economy was hit hard by the ramp up in tariffs in the latest quarter, when a slump in exports and drop in business investment led to the sharpest contraction in activity since early in the pandemic.
• For the first time, populist or far-right parties are leading the polls in the U.K., France and Germany, the latest sign of growing voter discontent in much of the continent following years of high immigration and inflation.
• There is a country in the European Union saddled with a massive debt pile, rising borrowing costs and governments that collapse in a matter of months—and it’s not Italy.
• Annual inflation in the eurozone picked up pace a little last month, cementing expectations that the European Central Bank will leave interest rates unchanged for a second-straight meeting next week.
• The eurozone’s unemployment rate fell to match a record low in July despite weak economic growth, underpinning expectations that the European Central Bank will leave its key interest rate unchanged next week.
• A private gauge of China’s manufacturing activity jumped back into expansionary territory in August, rising to a five-month high, though questions linger over whether the rebound can be sustained.
• South Korea’s headline inflation eased for the second consecutive month to a nine-month low in August, remaining below the central bank’s 2% target and paving the way for more rate cuts to support the economy.
• The political unrest in Indonesia gripped markets as protests across the nation turned deadly, with the benchmark stock index falling for a second straight session and the rupiah languishing near multimonth lows.
• Based on what’s happening in the black market for oil, the White House’s new import levy on India is backfiring.
• Key members of OPEC+ are set to meet Sunday to discuss production policy as the market braces for a global supply glut that is expected to put pressure on prices. However, excess supply has yet to show in inventory data or in the crude futures structure.

WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ’s global team of reporters and editors. This newsletter was compiled by markets reporter Vicky Ge Huang in New York. Send your tips, suggestions and feedback to vicky.huang@wsj.com.