The dollar failed to mount a challenge versus other currencies on Monday, amid growing speculation that the Federal Reserve is about to further ease monetary policy.
The central bank may take up arms against a possible double-dip recession with one of the few quivers left in its bag — another round of asset purchases.
Interest rates will remain near zero for an extended period, and with more quantitative easing on the way, few are willing to bet on the dollar these days.
With no first-tier economic data from the US to look at Monday, the currency markets were relatively quiet. Second quarter GDP, and new figures on consumer sentiment and manufacturing activity will help things pick up later in the week.
The dollar slipped to 1.3506 against the euro — its lowest since April — but stabilized from there. Over the past month, the dollar has fallen sharply from a recent 4-year high near $1.18.
The eurozone’s leading economic indicator climbed 0.4% in August compared to July, the Conference Board said on Monday. This followed a 0.8% increase in July and a 0.5% rise in June.
“The [leading index] for the euro area suggests that the slowdown in economic activity should be moderating in the near-term,” said Jean-Claude Manini, Conference Board senior economist for Europe.
The Bank of Japan failed to talk down the yen on Monday. The buck sat at Y84.20, not far from a recent 15-year low of 82.86.
Maasaki Shirakawa of the BoJ said the central bank “will pay close attention” to developments in currency markets, suggesting it will intervene for the second time this month to devalue to yen.
The dollar remained near a 2-year low of CHF 0.9778 against the Swiss franc, a preferred safe haven option.