Dollar Weakness Continues as Inflation Figures Loom

The US dollar hovered near its two-month low against major currencies on Monday as investors weighed in on the latest weakness in the American labor market and awaited key inflation figures.

The euro edged up to $1.1558, approaching its strongest level since mid-June, while sterling remained largely unchanged at $1.3490, near a five-week high.

Traders are looking for signs of moderating price pressures in the US consumer price index, due this week. Economists expect core CPI to increase 0.2% month-on-month in July, taking the annual rate to 2.5%.

The softer labour-market figures have triggered a decline in US Treasury yields, with the benchmark 10-year yield last reported at 4.637%. Interest-rate futures now indicate that traders see roughly a 44% probability of a September rate move, down substantially from about 67% a week earlier.