Dollar slips from two-week high

Hot Now

SINGAPORE: The dollar edged lower on Monday, paring some of the gains made in the wake of strong U.S. inflation data that bolstered bets the Federal Reserve will raise interest rates this year.The dollar index, which measures the greenback's value against a basket of six major currencies, fell 0.2 percent to 95.888. On Friday, it touched 96.108, its strongest level since Sept. 1.

U.S. consumer prices rose more than expected in August, data on Friday showed, pointing to a steady build-up of inflation that could allow the Fed to raise interest rates this year.

U.S. short-term interest rate futures are now implying a 55 percent chance of the Fed raising interest rates by December, compared to around 47 percent before the CPI data, according to CME Group's FedWatch Tool.

The implied probability of the Fed raising interest rates at its policy meeting this week remains low, at 12 percent.

It remains to be seen whether the U.S. central bank will manage to raise interest rates by December without triggering a bout of dollar strength, said Teppei Ino, an analyst for Bank of Tokyo-Mitsubishi UFJ in Singapore.

"That will test its (the Fed's) skill and will hinge on how they communicate," Ino said.