Investors’ appetite for risky assets was also harmed by reports from throughout the world of rising Delta coronavirus infections.
Investors will assess prospects for the Fed to reduce stimulus as soon as this year by looking at U.S. inflation statistics on Tuesday and Federal Reserve Chair Jerome Powell’s economic speech on Wednesday and Thursday, according to Manimbo.
In a note, Ronald Simpson, managing director, global currency analysis at Action Economics, said, “A hotter report will likely lift Treasury rates and the dollar, and bring the Fed taper talk back to the forefront.”
The dollar index, which compares the US currency to a basket of six other currencies, rose 0.1 percent to 92.264. The index is still hovering near a three-month high of 92.844 set last week.
The Australian dollar, which is typically seen as a liquid risk proxy, was down 0.17 percent on the day.
Despite a jump in cases to levels unseen in months, sterling weakened as British Prime Minister Boris Johnson was set to approve plans to abolish practically all remaining COVID-19 limitations in England from July 19.
At $1.3879, the pound was down 0.22 percent.
Meanwhile, the People’s Bank of China (PBOC) announced that it would reduce the amount of cash that banks must maintain as reserves, releasing about 1 trillion yuan ($150 billion) in long-term liquidity to support a slowing post-COVID economic recovery.
“While this is positive news, it also indicates that the authorities are concerned about China’s economic prospects,” said Marshall Gittler, head of investment research at BDSwiss Holding.
The Canadian dollar was trading at 1.2462 to the greenback, or 80.22 US cents, down around 0.1 percent.
Investors are waiting for the Bank of Canada to deliver its rate decision on Wednesday to see if it will signal a reduction in asset purchases.
Bitcoin was down roughly 3.4 percent at $33,109.25, and ether was down 5.2 percent at $2,028.54.
Check out our economic calendar for a complete list of today’s economic happenings.
(Julien Ponthus contributed reporting; Kevin Liffey and Chizu Nomiyama edited the piece.)
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