Us Dollar Hits Nine-week High China Yuan, Euro Down

The US dollar hit a nine-week high on Monday in thin trading, continuing its bullish trend in the last few weeks, triggered by economic data that, while trending lower, remained stable overall.

This suggested that the Federal Reserve, which launched its monetary easing cycle nearly four weeks ago, will implement moderate interest rate cuts going forward after an aggressive 50 basis-point reduction at its last policy meeting.

The dollar index, a gauge of the greenbacks value against six major currencies, rose to 103.26, the highest since mid-August. It was last up 0.1 at 103.18, with gains made at the expense of the euro, which fell 0.2 to 1.0913, ahead of an expected interest rate cut this week from the European Central Bank.

Separately, the dollar rose against the Chinese yuan after investors found Chinas weekend stimulus announcements disappointing.

But currency market participants focus remained on Fed rate expectations. The US rate futures market has priced in an 87 chance the Fed will ease by 25 bps at the November meeting, and a 13 chance it will pause and keep the fed funds rate at the target range between 4.75 and 5, according to LSEG estimates.