The U.S. dollar was close to its lowest level in three months against a resurgent euro, and traders pared earlier bets the country’s central bank may move soon to change its stimulus though markets were not fully convinced that higher inflation is temporary.
The dollar index was hovering at 90.045, slightly above a three-month low of 89.646 on Friday. Fed minutes showed a sizeable minority of policymakers wanted to discuss tapering bond purchases. Still, Fed Chairman Jerome Powell reiterated his position. Powell made it clear that he does not want to change the monetary policy. His comments led many investors to believe it will be months before the Federal Reserve actually tweaks policy.
On Friday, the White House said it pared down its infrastructure bill to $1.7 trillion from $2.25 trillion. The administration’s decision to reduce its infrastructure bill failed to impress Republicans. They described the changes as insufficient for a deal.
With investors paying a lot of attention to threats of accelerating inflation, U.S. PCE data due on Friday is seen as one of the biggest tests for markets this week. PCE stands for personal consumption expenditures.
The U.S. Commodity Futures Trading Commission released the data on Friday. The data showed speculators slightly increased their net short dollar positions in the latest week while raising long positions, both of them to their highest level since mid-March.
Dollar and other major currencies
The euro traded at $1.2179, flat so far on Monday and off a three-month high of $1.2245 several days ago. Comments made by European Central Bank President Christine Lagarde on Friday affected the euro, according to some analysts. Still, the euro and other European currencies have been bolstered by rising optimism regarding the economic reopenings in the region.
A preliminary purchasing managers’ index covering the 19-country euro zone’s service industry rose to 55.1 from April’s 50.5.
The pound stood at $1.4144, off Friday’s three-month peak of $1.4233.
The yen was little changed at 108.92 per dollar, trapped between a high of 109.785 and a low of 108.34. It touched both earlier this month.
Bitcoin fell more than 7% during the weekend to last trade up 2.4% at $35,528. It dropped to $31,107 at one point on Sunday.
Ether declined to the lowest point in two months to $1,730 on Sunday, down 60% from a record peak hit just 12 days ago. Cryptocurrencies suffered losses following Elon Musk’s announcement. He said Tesla will stop accepting bitcoin. China’s decisions regarding cryptocurrencies also affected the industry.