Dollar drops with focus on rate hike prospects elsewhere

Dollar drops with focus on rate hike prospects elsewhere
Dollar drops with focus on rate hike prospects elsewhere

The dollar fell on Monday, heading towards its lowest level in a month, as traders continued to focus on the prospects of raising interest rates and tightening monetary policy outside the United States.

Currency markets were generally calm at the start of the week as traders awaited US growth data and central bank meetings in the Eurozone, Japan and Canada.

The currency’s decline pushed the dollar index to its lowest level in a month in Asian trading and extended its decline after US Federal Reserve Chairman Jerome Powell said on Friday that it was not yet time to start raising interest rates. The index recovered some of its losses by 0730 GMT to record 93,542, down 0.1 percent.

Among the beneficiaries of the dollar’s decline were commodity-linked currencies such as the Australian, Canadian and New Zealand dollars, which also benefited from higher commodity prices.

The euro was little changed at the level of $1.1647, and the yen fell, and the dollar rose against it by 0.2 percent to 113.66 yen to the dollar.

Powell’s comments came after investors digested the start of the rate hike in the second half of next year and began reducing their long-term positions in anticipation of other central banks moving earlier.

In China, the yuan hit a five-month high of 6.3782 yuan per dollar, while the Turkish lira fell to a new record, following a surprise rate cut last week.

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