The US dollar slipped to a fresh one-month low against a basket of currencies on Monday, as investors bet on the US Federal Reserve easing policy in a bid to counter the negative impact from the spread of the new coronavirus.
The dollar index, which measures the greenback's strength against a basket of six other major currencies, was 0.44% lower at 97.543; after slipping to a 1-month low of 97.296.
Global risk assets, including equities, were hammered hard last week as investors worried about the economic impact of the global spread of the virus.
The panic in global markets prompted US Federal Reserve Chairman Jerome Powell to issue a statement late on Friday saying the Fed would "act as appropriate" to support the economy.
Investors took his comments as a hint that the Fed will deliver a cut when it meets March 17-18, and as an encouragement to central banks around the world to follow suit. Futures now imply a 50 basis point cut at the meeting.
"The US dollar continued to bleed strength as the spreading coronavirus heightened expectations for shock and awe caliber interest rate cuts by America's central bank," said Joe Manimbo, senior market analyst at Western Union Business Solutions.
On Monday, the euro was up 0.9% against the dollar.
The yen, which tends to draw investors during times of geopolitical or financial stress as Japan is the worlds biggest creditor nation, was up 0.5% against the dollar despite Bank of Japan Governor Haruhiko Kuroda saying the BOJ would take necessary steps to stabilize financial markets.
Sterling came under renewed pressure on Monday, dropping to a 4-1/2 month low against the euro, as traders took a cautious view at the start of talks between Britain and the European Union on their future relationship after Brexit.
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