The yen strengthened on Monday following a selloff of commodities and stocks While the dollar was also weaker against the safe-haven currency, it was stronger against other major currencies, including the euro and Australian dollar.
The greenback was supported by renewed prospects of a near-term rate hike by the Federal Reserve.
Investors are focused on Fed Governor Lael Brainard, who will give a speech later today. The timing of the Fed’s most notorious dove is too much of a coincidence, investors say, with the Fed’s Open Market Committee blackout period is just days away. Market players are expecting her to signal that further tightening is in the near future.
The dollar eased 0.6% against the yen, trading at 102.10. Against the Australian dollar, the greenback was 0.5% higher. The euro slipped against the dollar, trading 0.15% lower at 1.1218.
Brainard’s speech will be the last one scheduled before the blackout period. Boston Fed President Eric Rosengren’s upbeat remarks on Friday pushed the odds of a September hike to 30%. Rosengren said the U.S.’s low interest rates are increasing the risk of overheating the economy. Analysts believe his comments set the stage for Brainard’s speech.
In recent weeks, a string of upbeat comments from Fed officials kept hopes of a rate hike alive despite subdued economic data.
The pound eased against the dollar, trading down 0.17% at 1.3245.
Both the New Zealand and Australian dollars were lower against their U.S. counterparts, with AUD/USD at 0.7506 and NZD/USD at 0.7302.
The dollar was 0.42% higher against its Canadian counterpart, trading at 1.3106.
The commodity currencies were weakened by falling oil prices after a report showed an increase in the U.S.’s oil drilling.
The dollar index was holding steady during morning trade on Monday, at 95.39. Speculators boosted their bets of a rate hike last week for the first time in six weeks, according to Reuters.