The dollar resumed declines on Monday in New York amid a rebound in US equities and other risk assets ahead of fresh inflation data and the results of mid-terms elections this week, which hurt demand for the safety of the greenback.
A Bloomberg gauge of the US currency fell 0.3% by 9:30 a.m. in New York after rising as much as 0.5% earlier. Most emerging-market currencies were up on the day, while the pound, Swiss franc and euro were among the biggest gainers among Group-of-10 currencies. US stock futures rose, while Treasuries were caught between optimism for a moderation in inflation and a near-term impact from a pickup in corporate issuance.
US data Friday showed strong hiring and wage increases in a mixed picture for Federal Reserve officials debating how long to extend their campaign to curb elevated inflation. Still, Goldman Sachs Group Inc.’s top economist Jan Hatzius said on Monday that there’s still a “very plausible” path for the US economy to avoid a recession despite the Fed’s aggressive tightening and geopolitical uncertainties.
Risk assets remained bid on Monday even as China reiterated its commitment to Covid-Zero on Saturday. Speculation the Asian country was edging away from the policy catapulted risk appetite on Friday, leading the dollar through its worst one-day slump since March 2020. In addition to the results of US mid-term elections, attention is also turning to US consumer price data on Thursday.
