SINGAPORE – The U.S. dollar strengthened to a near three-month high on Monday as investors awaited key economic data releases this week to assess the health of the U.S. economy and the Federal Reserve’s next move on interest rates.
The yen remained under pressure, hovering near an eight-and-a-half-month low, weighed down by a wide interest rate gap between Japan and the United States. Trading across Asia was subdued due to a holiday in Japan, keeping most currencies rangebound but pinned near recent lows against the dollar.
The euro slipped to $1.1527, its lowest in three months, while the British pound fell 0.26% to $1.3136 ahead of the Bank of England’s policy meeting this week, where rates are expected to remain unchanged. Investors are also watching for ADP employment data and ISM PMI reports, as the ongoing U.S. government shutdown is expected to delay the release of the crucial nonfarm payrolls report.
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Last week, the Federal Reserve cut interest rates by 25 basis points, as widely anticipated. However, Chair Jerome Powell signaled that this could be the last rate reduction for the year, citing caution amid uncertain economic indicators. Several Fed officials also expressed concern over further easing, leading traders to scale back expectations for another cut in December.
The dollar index rose to 99.82, its highest since August, while the yen traded at 154.15 per dollar, prompting speculation that Japanese authorities may intervene if the currency weakens further toward 155. Meanwhile, the Australian and New Zealand dollars also hovered near multi-month lows ahead of the Reserve Bank of Australia’s rate decision on Tuesday.