Dollar Slips as Markets Weigh Fed Rate Outlook

The US dollar inched lower on Monday as markets weighed the outlook for Federal Reserve rate hikes. This comes after hawkish remarks from Fed Chair Kevin Warsh, who said that policymakers would need to see confidence that inflation is heading down to 2%.

The comments fueled bets on a September rate hike, with implied probability of a move next month rising to 58%. Yields on interest-rate-sensitive 2-year US Treasury notes held near a one-month high.

Warsh's prepared remarks were seen as designed to lift rate-hike expectations and rebalance the September debate towards hawks. Investors are now turning their focus to upcoming US data, particularly Friday's nonfarm payrolls report and next week's consumer inflation figures.