At a closely watched symposium at Jackson Hole, Wyoming, the Fed chairman on Friday emphasised the central bank's push to raise interest rates despite President Donald Trump's recent criticism of higher borrowing costs.
The dollar index against a basket of six major currencies (DXY) lost 0.1 percent to 95.07, after slipping more than 0.5 percent in the previous session.
The euro was little changed at $1.1624 (EUR=) after going as high as $1.1654, its strongest since Aug. 2. The single currency had advanced more than 0.7 percent on Friday.
The dollar was down 0.15 percent at 111.06 yen .
The Chinese yuan extended is rally in the onshore market to as high as 6.8061 per dollar , its strongest since Aug. 8.
· EUR/USD Technical Analysis: EUR has eroded 4-month downtrend line
The EUR closed above the trendline sloping downwards from the April 19 high and July 31 high on Friday, strengthening the bull grip.
The EUR/USD clocked a 25-day high of 1.1654 in Asia and is now trading at 1.1627.
The trendline support (former resistance) could be put to test before further rally unfolds, as the 14-hour relative strength index (RSI) is reporting overbought conditions.
· According to the CME Group FedWatch Tool, markets are now pricing a 63.7% probability of a second 25 bps rate hike in December compared to 60.6% seen on August 21. The odds of a 25 bps rate hike in September remains steady at 93.6%.
· Besieged by increasing legal concerns, U.S. President Donald Trump is thought to be looking to shore up his political position ahead of the midterm elections in November.
One way to do so could be to distract voters from the problems at home by shifting the focus to the ongoing trade war with China, analysts said. In other words, the U.S. may be on the verge of escalating the conflict between the world's two largest economies.
· China's central bank altered how it manages the country's currency, signaling that authorities have no intention of using the yuan as a weapon in the ongoing trade war with the United States, analysts said.
The yuan has come under intense pressure in recent weeks on concerns about the outlook for the Chinese economy, the world's second largest, in part resulting from the ongoing tariff conflict with the U.S. On Friday, the People's Bank of China appeared to respond to that pressure, announcing that it was reintroducing a calculation method it called a "counter-cyclical factor" to keep the yuan's daily midpoint fixed to a relatively stable value.
· China’s investment growth, already at record lows, may weaken even further in future and authorities should step up fiscal and financial measures to give it a boost, the state planner said on Monday.
Beijing is urging more infrastructure spending as the economy faces both domestic and external risks, such as U.S. tariffs. But the benefits will take time to kick in, with analysts expecting the economy to get worse before it gets better.
· Iran and Syria signed a deal for military cooperation in a meeting between the defense ministers of the two countries in Damascus, the Tasnim news agency reported on Monday.
Tasnim did not provide any details about the military cooperation deal.
U.S. National Security Adviser John Bolton said last week that Iran should remove its forces from Syria.
· Oil prices fell on Monday on concerns the U.S.-China trade dispute will erode global economic growth, although looming U.S. sanctions against Iran’s oil sector kept crude from falling further, traders said.
International Brent crude oil futures LCOc1 were at $75.63 per barrel at 0654 GMT, down 19 cents from their last close.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were down 30 cents at $68.42 a barrel.
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