US dollar weakens as Fed officials set to speak this week
The U.S. dollar snapped a three-day rising streak on Monday, as investors await comments from Federal Reserve officials to better gauge the monetary policy outlook after the central bank resumed its easing cycle last week.
The dollar hovered near levels seen before last week’s Fed decision. The current pricing is consistent with the central bank’s messaging, which highlighted rising concerns over the U.S. labour market as the key driver of policy, analysts said.
Last week’s U.S. economic data showed the number of Americans filing new applications for unemployment benefits fell, reversing the prior week's jump.
“The lack of significant data until Friday’s core Personal Consumption Expenditures (PCE) inflation release leaves investors open to rethinking Fed rate cuts and the plan ahead,” said Bob Savage, head of markets macro strategy at BNY Mellon.
The dollar was slightly lower after last week’s rebound when the Fed signalled little urgency to ease its policy in the coming months. It was down 0.23% at 97.43 against a basket of currencies.
The euro was up 0.30% at $1.1783.
The yen rose a modest 0.05% to 147.85 per dollar , after last week's hawkish shift in the Bank of Japan’s rhetoric, which fuelled speculation of a near-term rate hike but failed to support the currency.
Analysts said that one factor contributing to the Bank of Japan's current caution over further rate hikes was political uncertainty ahead of the Liberal Democratic Party leadership election scheduled for October 4.
“We have revised up our end 2025 dollar/yen forecast from 130 to 143,” said Arend Kapteyn, economist at UBS.
“The dollar downside is likely to be mostly driven by the U.S. rates cycle and a potential souring of global risk sentiment,” he added.
Sterling rose against the dollar on Monday as investors paused following Friday's selloff driven by fiscal concerns.
The pound was up 0.25% at $1.3502, after hitting a two-week low of $1.3453 early in the session.
Elsewhere, the Australian dollar rose 0.10% to $0.6596, after hitting $0.6575, its lowest level since September 8.
Source: Reuters
