The dollar fell against a basket of currencies on Monday, undermined by recent soft U.S. economic data that tempered expectations of a Federal Reserve interest rate hike this year.
The dollar, which has fallen in four of the last five trading sessions, also slipped against the yen, a trend that has been in place for much of this year, with investors generally underwhelmed by Japan's recent stimulus measures.
The dollar index was down 0.1 percent at 95.61 .DXY after dropping to its lowest since Aug. 3 last Friday. The euro was up 0.2 percent at $1.1181 EUR=.
Federal funds futures implied traders saw a roughly 43 percent chance on Monday that the central bank would increase rates at its December policy meeting. That was down from 45 percent late on Friday.
Traders said the minutes from the Fed's July policy meeting, due to be released on Wednesday, could give investors more clues as to the direction of monetary policy.
Central bankers and governments must come up with new policies to buffer their economies against persistently low interest rates that threaten to make future recessions deeper and more difficult to avoid, a top Federal Reserve official said on Monday.
Setting higher inflation targets, tying monetary policy directly to economic output, instituting government spending programs that automatically kick in during economic downturns, and boosting investment in education and research are all policies that should be considered, San Francisco Fed President John Williams said.
Without such changes, Williams warned, policymakers will find themselves hamstrung.
"There is simply not enough room for central banks to cut interest rates in response to an economic downturn when both natural rates and inflation are very low," Williams said in the latest issue of his regional Fed bank's Economic Letter.
Oil prices hit five-week highs on Monday, gaining 10 percent or more in a three-day rally as speculation intensified over potential producer action to support prices amid a crude glut.
Data from market intelligence firm Genscape estimating a draw of more than 350,000 barrels at the Cushing, Oklahoma delivery point for U.S. crude futures last week added to the bullish sentiment, said traders who saw the data.
Separately, a Reuters poll indicated total U.S. crude inventories may have fallen too last week.
Brent crude LCOc1 settled up $1.38, or 2.9 percent, at $48.35 a barrel. Minutes after the close, it extended gains, reaching $48.46, its highest since July 12. Brent has gained about 10 percent cumulatively in the past three sessions, its most in such a stretch since May. Since the start of August, it has risen nearly 14 percent.
Reference: Reuters
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