Dollar Holds Near Two-Month Low as Inflation Data Looms

The US dollar has been hovering near its two-month low against major currencies. Investors are waiting for this week's inflation data, which will provide clues about the Federal Reserve's rate path.

The euro edged higher to $1.1558, reaching a level not seen since mid-June. The sterling remained steady at $1.3490, near its five-week peak. The yen held firm at 157.90 per dollar, having given back some intervention-driven gains but remaining well off the roughly 164 multi-decade low hit late last month.

The dollar index, which tracks the currency against six major peers, was little changed at 99.6, hovering near its lowest level since June 2. This comes after the release of Friday's jobs report, which showed the US economy unexpectedly shed jobs in July and revised job gains for the prior two months sharply lower.

The futures market has scaled back the chance of a September Fed rate hike to around 44%, from 67% a week ago. Geoff Yu, senior EMEA market strategist at BNY, noted that the weaker US labor-market signal has pulled down real-rate expectations and extended the dollar decline.