The US dollar fell to its lowest level in five weeks on Monday. Investors are focused on the US employment data to be released this week; the results will be critical for the Fed’s interest rate reduction process.
The dollar index fell 0.22% to 97.64, reaching its lowest level since July 28 at 97.55. In August, it lost a total of 2.2%
Markets are pricing in a 90% probability of a 25 basis point interest rate cut in September. Expectations for a total of 100 basis points of cuts by the fall of 2026 have also increased.
Analysts point out that the US economy is no longer performing as well as it did in the past decade, emphasizing that the weak labor market could further put pressure on the dollar. However, some experts say that a more aggressive step of 50 basis points may also be on the table.
The euro rose 0.35% to $1.1724, while the pound rose 0.18% to $1.3528. The dollar remained flat against the yen at 147.
Meanwhile, a private survey of China’s manufacturing sector showed its fastest growth in five months, supporting the yuan.
