The U.S. dollar was nursing losses near 13-month lows against a currency basket on Monday, pressured lower by persistent political uncertainty in Washington and doubts over whether the Federal Reserve will hike rates again this year.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 93.25 by 02.29 a.m. ET (06.29 a.m. GMT), after ending Friday’s session down around 0.6%.
The index has fallen around 2.2% so far, this month and is down around 9% for the year to date.
The dollar remained on the back foot after data on Friday showing that while U.S. economic growth accelerated in the second quarter wage growth and inflation remained sluggish.
The subdued inflation outlook has raised doubts over whether the Fed will be able to stick to plans for a third interest rate hike this year.
The dollar had been supported by the Fed’s gradual policy tightening since late 2015 but the prospect that other major central banks may join it in tightening monetary policy has fed into recent dollar weakness.
Declining expectations for tax reforms and fiscal stimulus under the Trump administration have also weighed on the dollar.
Hopes that the Trump administration will be able to push through its economic agenda received another setback on Friday after the U.S. Senate failed to dismantle Obamacare.
The dollar was slightly lower against the yen, with USDJPY at 110.59, after touching a one-and-a-half month low of 110.31 overnight.
The euro was a touch lower, with EURUSD down 0.2% to 1.1727, still not far from 1.1777, its strongest level since January 2015 set on Thursday.
Elsewhere the pound was little changed with GBPUSD at 1.3126, still within striking distance of the 10-month high of 1.3158 set on Thursday.
The Canadian dollar slid lower, with USDCAD advancing 0.27% to 1.2467. The loonie rallied on Friday after stronger than expected economic growth data underlined expectations for another rate hike by the Bank of Canada in the coming months.