Dollar falls to 2-1/2 month low on Fed expectations, yen strengthens

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Key Points

NEW YORK (Reuters) -The dollar index fell to its lowest in more than two months on Monday, continuing a drop from the prior week, as investors largely believe the U.S. Federal Reserve has completed its interest rate hike cycle and look towards when the central bank may start to cut rates...

The dollar index hit a low of 103.37, its weakest level since Sept. 1, after a tumble of nearly 2% last week, which marked the biggest weekly percentage drop since mid-July...

Markets have priced out any additional Fed rate hikes, as recent data has shown a slowing of the economy and inflation pressures but not enough to increase fears a sharp recession is looming...

On Monday, Richmond Federal Reserve president Thomas Barkin said inflation is likely to remain stubborn and force the central bank to keep interest rates higher for longer than investors currently anticipate...

The euro has been strengthening on expectations the European Central Bank (ECB) is operating with a lag to the Fed, and will keep its rate hike cycle intact after the Fed has finished.. In addition, Moodys unexpectedly upgraded the outlook on Italys Baa3 sovereign rating to stable from negative and upgraded Portugals rating by two notches to A3...

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