WASHINGTON (dpa-AFX) - The U.S. dollar weakened against most major currencies on Monday with traders speculating the Federal Reserve will announce a rate cut in the foreseeable future on rising fears the ongoing trade war could significantly hurt global growth.
St. Louis Federal Reserve President James Bullard hinted at a rate cut soon.
Bullard said today today that the Fed faces an economy that is expected to grow more slowly going forward and warned the slowdown could be sharper than expected due to ongoing global trade regime uncertainty.
'In addition, both inflation and inflation expectations remain below target, and signals from the Treasury yield curve seem to suggest that the current policy rate setting is inappropriately high,' Bullard said in remarks to the Union League Club of Chicago on Monday.
He concluded, 'A downward policy rate adjustment may be warranted soon to help re-center inflation and inflation expectations at target and also to provide some insurance in case of a sharper-than-expected slowdown.'
The dollar was also weighed down by a report that showed a closely-watched gauge of U.S. manufacturing activity slumped to its lowest level in about 30 months in May.
The report released by the Institute for Supply Management showed the pace of growth in U.S. manufacturing activity unexpectedly saw a continued slowdown in the month of May.
The ISM said its purchasing managers edged down to 52.1 in May from 52.8 in April, dropping to its lowest level since hitting 51.7 in October of 2016.
The dollar index dropped to a low of 97.11 and was last seen moving around 97.23, down by about 0.55% from previous close.
The euro strengthened to $1.1244 as against $1.1166 it fetched late on Friday.
Against British Pound Sterling, the greenback was down 0.28% with a unit of sterling buying $1.2666, as against $1.2630 on Friday evening.
The Japanese yen firmly held on to its safe haven status, rising to its best level against the greenback in nearly five months. The currency was trading at 108.06 a dollar, as against 108.31 yen a dollar on Friday.
The dollar was down more than 0.5% against the aussie at 0.6977, and about 0.5% against the loonie at 1.3449. Against Swiss franc, the dollar suffered a sharper loss, going down by about 0.8% at 0.9927.
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