Dollar hits nine-month high against yen

The dollar index, which measures the U.S. currency against six others, was down 0.08% at 104.07, after hitting its highest since early June on Friday at 104.44.

Investors raised bets that the U.S. central bank could hike rates again this year after Powell said that further rate increases may be needed to cool still-too-high inflation, while also promising to move with care at upcoming meetings.

Markets see an 81% chance of the Fed standing pat next month, according to the CME Group’s FedWatch tool, but the probability of a 25 or 50 basis point hike in November is now at 57%, versus 43% a week earlier.

The market is largely consolidating before European inflation and U.S. personal consumption expenditures data due on Thursday, and ahead of Friday's highly anticipated U.S. jobs report for August.

The euro has weakened against the greenback for the past month as the United States economy remains solid, while European growth slows.

"Europe is stagnating," said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York, adding that not only is the European Central Bank talking about tightening monetary policy further, government budgets for the next year also look like they are going to be cut.

The single currency was last at $1.0806, up 0.11% on the day, after falling to $1.07655 on Friday, the lowest since June 13.

China’s yuan steadied against the dollar, buoyed by the Chinese central bank persistently setting stronger-than-expected daily-mid-points. The spot yuan was roughly flat at 7.2928 per dollar.

The China-sensitive Australian dollar rose 0.31% to $0.6423, having taken a beating this month as worries over China’s sputtering post-pandemic recovery weighed on sentiment.

"Market confidence will unlikely improve much until there are signs of China's weakening economic momentum turning around," said Tommy Wu, senior economist at Commerzbank.

China halved the stamp duty on stock trading effective Monday in the latest attempt to boost the struggling market as a recovery sputters in the world’s second-biggest economy.

However, Chandler noted "how quickly the market rebuffed the Chinese efforts to pump up their stock market."

China’s blue-chip CSI 300 Index was up 1.2% at the close, some distance from the 5.5% jump at the market open.

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Currency bid prices at 10:10AM (1410 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Dollar index 104.0700 104.1700 -0.08% 0.560% +104.1800 +103.9700

Euro/Dollar $1.0806 $1.0794 +0.11% +0.84% +$1.0822 +$1.0794

Dollar/Yen 146.5650 146.4500 +0.09% +11.80% +146.6700 +146.2800

Euro/Yen 158.37 158.07 +0.19% +12.88% +158.5600 +158.0900

Dollar/Swiss 0.8846 0.8847 +0.02% -4.30% +0.8867 +0.8819

Sterling/Dollar $1.2587 $1.2577 +0.08% +4.08% +$1.2610 +$1.2568

Dollar/Canadian 1.3578 1.3601 -0.19% +0.19% +1.3611 +1.3575

Aussie/Dollar $0.6423 $0.6403 +0.31% -5.77% +$0.6439 +$0.6403

Euro/Swiss 0.9557 0.9546 +0.12% -3.42% +0.9563 +0.9541

Euro/Sterling 0.8583 0.8575 +0.09% -2.95% +0.8598 +0.8575

NZ $0.5909 $0.5903 +0.11% -6.94% +$0.5925 +$0.5893

Dollar/Dollar

Dollar/Norway 10.6850 10.7250 -0.41% +8.83% +10.7490 +10.6680

Euro/Norway 11.5491 11.5497 -0.01% +10.06% +11.6300 +11.5211

Dollar/Sweden 10.9921 11.0547 -0.32% +5.61% +11.0686 +10.9907

Euro/Sweden 11.8787 11.9173 -0.32% +6.54% +11.9474 +11.8763