US dollar drops to three-week low as Fed rate hikes nearly done
investing.comBy Gertrude Chavez-Dreyfuss
NEW YORK (Reuters) — The dollar sank to a three-week low on Monday after comments by Federal Reserve officials reinforced market expectations that the U.S. central bank is near the end of its tightening cycle.
The Fed, however, is widely expected to raise interest rates by another 25 basis points this month despite Friday's data showing U.S. job gains were the smallest in 2-1/2 years. The expected rate hike in July would follow a Fed pause in June.
Several Fed officials led by San Francisco Fed President Mary Daly on Monday said the central bank likely will need to raise interest rates further to bring down inflation that remains persistently high, but the end to its current monetary policy tightening cycle is getting close.
In afternoon trading, the dollar index, which tracks the U.S. currency against a basket of major peers, slid 0.3% to 101.98, a three-week low.
The euro rose to three-month peaks of $1.0997 versus the dollar and last changed hands at $1.0995, up 0.2%.
Against the yen, the greenback fell as low as 141.32 yen, the lowest since June 21. It was last down 0.6% at 141.335. It slid nearly 1.3% last Friday after U.S. nonfarm payrolls increased 209,000 in June, missing market expectations for the first time in 15 months.
«The weaker pressure on the dollar has… been hard to square from a relative rates and growth standpoint,» said Erik Nelson, macro strategist at Wells Fargo (NYSE:WFC) in London.
«U.S. growth has outperformed expectations, while Europe and China have underperformed. I think the U.S. economy is stronger than we give it credit for,» Nelson added.
Details in Friday's employment report reflecting persistently strong wage growth underscored market pricing of a further
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