While Fed chair Janet Yellen won’t attend this year, investors and traders will eye comments from other key members of the Fed for fresh clues about the rate outlook.
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The US dollar index, which measures the greenback against a basket of currencies, touched its lowest level in nearly two months after traders pushed out their expectations for US interest rate hikes on last week’s softer-than-expected minutes to the Federal Reserve’s July meeting.
Ultra-low interest rates in the euro zone and Japan have prompted investors to borrow in euros and yen to purchase currencies that provide higher returns, typically commodity currencies such as the Australian and New Zealand dollars.
“The Fed delaying rate hikes represents an easing of US monetary conditions”.
But the buck’s performance on Monday wasn’t entirely negative.
That gave credence to a view that while the dollar was likely to struggle against major and more liquid currencies, it would rise against those in emerging markets.
“I suspect towards the back end of the week we are going to start getting a bit more dollar strength”, said Chris Weston, chief market strategist at IG Markets in Australia.
The Mexican peso hit a fresh record low (http://www.marketwatch.com/story/mexican-peso-hits-record-low-vs-dollar-could-go-lower-2015-08-24) against the dollar Monday, but has since recovered slightly. China is New Zealand’s largest trading partner.
Core inflation in the euro area “has a greater disinflationary impact from China’s currency move and lower commodity prices” than in the U.S. 98 to the dollar, up 2.4% on the day, after briefly rising to Yen116.
The kiwi also rose because a number of investors were betting on its decline and had to buy back the currency as it gained to limit their losses, Rankin said.
The euro traded above $1.17 Monday for the first time since January 15.as the dollar weakened sharply against its industrialized rivals. It recently traded at $1.1542, compared with $1.1388 late Friday in New York.
The euro has strengthened about 5.6% since July, while Germany’s DAX Index has tumbled 16%, heading for its worst monthly drop in four years.
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As the rout in global stocks and commodities altered bets on the trajectory of the currency market, two of the most influential banks adjusted their dollar forecasts – in opposite directions. Selling bled over into European and U.S. markets as investors anxious about the fallout from China.
