Dollar Drifts Toward Worst Aug in 5 Years

The dollar is heading to record a loss for the fourth consecutive month after a shift in the US Federal Reserve’s policy on inflation, while the euro is poised to record a fourth month of gains, which puts the two currencies at levels not seen since 2018.

Investors are adapting to a speech last Thursday in which Federal Reserve Chairman Jerome Powell announced the outlines of an adaptive change in policy, which he believes will cause a slight movement of inflation towards an increase and keep low interest rates for a longer period.

Against a basket of currencies, the dollar rose 0.1% to 92,356 in early trade, declining 1.2% on a monthly basis. If this continues, it will be the worst performance in August in five years and the longest streak of monthly losses since the summer of 2017.

The euro settled at $ 1.1903 and is on its way to a monthly gain of 1%, which will be its fourth consecutive monthly gain.

The yen fell by 0.4% in Asian trading to 105.77 per dollar, after rising to 104.195 on Friday, following the resignation of Shinzo Abe as prime minister for health reasons.

The Chinese yuan reached a 14-month high of 6.844 against the dollar in foreign trade, with investors receiving positive response to the service sector growth rather than worrying about the faltering recovery in the manufacturing sector. Later, it erased some of the gains and was at 6.8556 in the most recent trade.