The U.S. dollar fell on Monday as investors assessed dovish remarks from Federal Reserve officials, which bolstered expectations of a rate cut next month and tempered gains against major currencies.
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The dollar rose against the Japanese yen, as traders awaited potential government interventions in Tokyo to halt the yen’s decline.
By midday trading, the euro edged up 0.1% against the dollar to $1.1526, pushing the dollar index down 0.1% to 100.15 points. The dollar also slipped 0.1% versus the Swiss franc to 0.8079 CHF.
Dollar weakness followed comments from Fed board member Christopher Waller, who said that U.S. labor market data remain weak enough to justify another 0.25 percentage point rate cut at the September policy meeting. His remarks came after New York Fed President John Williams stated on Friday that the central bank could still lower rates “in the near term” without jeopardizing inflation targets.
However, several Fed officials have urged caution, recommending that further easing be postponed until clear evidence shows inflation trending toward the 2% target. Markets are also watching for upcoming U.S. economic data, including retail sales and producer prices later this week.
The yen weakened against the dollar, which gained 0.2% to 156.755 yen, near last week’s ten-month high of 157.90. The yen’s decline reflects Japan’s ultra-loose monetary policy and one of the world’s lowest interest rates, prompting speculation about potential interventions to stabilize the currency. The yen had recovered slightly last Friday after Finance Minister Satsuki Katayama intensified warnings of intervention.
The British pound rose slightly to $1.3108 ahead of the budget announcement on Wednesday. Finance Minister Rachel Reeves aims to balance spending to support sluggish growth while demonstrating fiscal responsibility.
Meanwhile, cryptocurrency markets were stable early in the week, with Bitcoin up 0.6% to $88,495.19.
Reuters
