The U.S. dollar continued its upward trend in Asian trading on Monday, supported by rising yields as investors remain cautious amid speculation on Fed rate cuts, while China’s underwhelming stimulus measures also supported the greenback.
With Japanese markets closed due to a holiday, liquidity was low, further amplifying market reactions.
By 2:10 pm AEDT (3:10 am GMT) the euro fell 0.1% to $1.0925, while the pound was steady at $1.3059.
Meanwhile, the dollar lifted 0.2% against the yen to trade at 149.328.
The U.S. dollar index was up 0.1%, trading near 2-month highs of 103.02 as traders scaled back expectations for large Federal Reserve rate cuts in the remaining months of the year.
China’s onshore yuan declined by 0.1% against the dollar, while the Australian dollar, closely linked to China’s economic health, dipped 0.1% to $0.6739.
China’s Finance Ministry announced on Saturday plans to "significantly increase" government debt issuance to provide subsidies for low-income households, support the struggling property sector, and replenish capital in state-owned banks.
However, the absence of concrete figures or a major fiscal stimulus package left investors disappointed.
Meanwhile, U.S. Treasury markets are expected to remain subdued on Monday, with both Japanese and U.S. markets closed for holidays.
In the U.S., economic data from last week showed slightly higher-than-expected inflation alongside an increase in jobless claims. As a result, traders continue to anticipate the Federal Reserve will cut rates by 25 basis points in both November and December.
Market focus is now shifting to U.S. retail sales and jobless claims data, due to be released on Thursday.