DXY Edges Up

The dollar edged up to 106.5 on Monday, slightly recovering from a 3-1/2-month low of 105.32 supported by safe-haven demand as investors fretted about a global slowing economy and the spread of coronavirus in China which forced some lockdowns.

Meanwhile, investors reassessed the outlook for monetary policy.

A substantial majority of Fed policymakers have been hinting that soon will be appropriate to slow the pace of interest rate hikes for the central bank to assess the economic landscape.

Earlier this month, the Fed delivered its fourth straight 75 basis point rate increase and pushed borrowing costs to the highest since 2008 to tame stubbornly high inflation.

Money markets are now pricing in a 70% chance that the central bank would deliver a smaller 50-bps rate hike in December.