Dollar Falls on Hurricane Damage and Jackson Hole Silence

An already weak dollar dropped to 16-month lows against a basket of major currencies on Monday, as flooding caused by Tropical Storm Harvey paralysed the United States’ fourth-biggest city and drove worries about a hit to the economy.

The greenback had already fallen sharply on Friday, after U.S. Federal Reserve Janet Yellen failed to mention monetary policy at the closely watched Jackson Hole meeting in Wyoming. Investors saw this as evidence that Yellen was comfortable with their rate hike expectations – currently only one is priced in by the end of next year.

The euro, meanwhile, climbed to a 2-1/2-year high close to $1.20 EUR=, extending gains made at the end of last week after European Central Bank President Mario Draghi held back from talking down the buoyant currency at the same meeting.

The dollar index .DXY – which measures the U.S. currency against six major rivals with the euro given the heaviest weighting – was down 0.3 percent by 1200 GMT at 92.501, having earlier fallen to as low as 92.372, its weakest since early May 2016.

via Reuters

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