The U.S. dollar traded near multi-month lows on Monday as concerns over U.S. fiscal policy and mixed signals from major central banks kept the currency under pressure.
The Canadian dollar weakened 0.2% to C$1.3798 per dollar after Washington imposed a 50% tariff on Canadian goods, with Ottawa responding in kind. The move followed a week in which the yuan strengthened to a 3.5-year high at 6.7222 per dollar, marking its eighth consecutive weekly gain. The Australian dollar and New Zealand dollar both traded near three-month highs at $0.7171 and $0.5979, respectively, while the euro held above $1.16 at $1.1685.
The yen remained firm near 159 per dollar, supported by expectations that the Bank of Japan may signal further policy tightening at its upcoming meeting. Analysts noted that any hawkish comments from BOJ deputy governor Ryozo Himino could provide only modest support for the yen, as movements in U.S. bond yields remain the primary driver of USD/JPY.
U.S. Treasury Secretary Scott Bessent is scheduled to hold a press conference later on Monday, with markets awaiting any details on fiscal measures amid rising long-term yields. The 30-year Treasury yield recently approached two-decade highs, prompting the U.S. Treasury to double its long-end buybacks to $4 billion per operation. The total U.S. bond market stands at $32 trillion.
Federal Reserve Chairman Kevin Warsh is set to speak at the Jackson Hole symposium on Friday, where investors will seek clues on monetary policy amid strong U.S. services growth in August, the strongest in nearly two years. AMP’s Shane Oliver cautioned that Treasury efforts to suppress long-term yields could reignite dollar debasement concerns, while BNY’s Geoff Yu suggested that comments on balance sheet management may have a greater impact on yields than economic data.
Commonwealth Bank of Australia’s Joe Capurso noted that Himino’s remarks could hint at another BOJ rate hike, though the broader impact on the dollar may be limited.
