TOKYO- The dollar plumbed a six-year trough against the Canadian dollar and teetered near multi-month lows versus European currencies amid renewed expectations that the United States will not hike interest rates anytime soon.
Dallas Federal Reserve President Robert Kaplan on Monday reiterated his view that he does not expect interest rates to rise until next year, fueling a further decline in bets that inflationary pressure could force the Fed to act sooner.
This week a host of Fed policymakers are scheduled to speak, and the US central bank will also release minutes from its most recent meeting, which may give indications about where monetary policy is headed this year.
However, the growing consensus is that the Fed will tolerate what it sees as a temporary acceleration in inflation, which will keep the dollar lower against most major currencies.
“The most important point is where are yields headed,” said Junichi Ishikawa, senior foreign exchange strategist at IG Securities. “Yields are capped, reflecting expectations that US monetary policy will remain easy,” Ishikawa added.
“This places the dollar under downward pressure.”
Against the euro, the dollar traded at $1.2167, close to the weakest since Feb. 26.
The British pound rose to $1.4174 to reach its strongest since late February.
Sterling has been buoyed recently as investors cheer the gradual lifting of strict coronavirus restrictions.
The Canadian dollar advanced to a six-year high of C$1.2045 against the greenback, aided by a rise in oil prices.
