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© Reuters. FILE PHOTO: A picture illustration shows U.S. 100 dollar bank notes taken in Tokyo August 2, 2011. REUTERS/Yuriko Nakao/File Photo

By Gertrude Chavez-Dreyfuss and Alun John

NEW YORK/LONDON (Reuters) – The dollar sank to a three-week low against the yen on Monday and slipped against other major currencies as investors continued to price in expectations that the Federal Reserve is near the end of its tightening cycle.

The Fed, however, is widely expected to raise interest rates by another 25 basis points this month despite Friday’s data showing U.S. job gains were the smallest in 2-1/2 years. The expected rate hike in July comes after a Fed pause in June.

Meanwhile, Norway’s crown, the second-weakest performing currency in the G10 this year, strengthened after data showed core inflation continued to rise in June and hit a fresh record.

The , on the other hand, slumped against the dollar after weak inflation numbers in the world’s second-largest economy.

In the United States, details in Friday’s employment report reflecting persistently strong wage growth underscored market pricing of a further rate hike later this month. The market though is coming to the realization that an end to the Fed’s cycle of rate hikes is at least near, even if once-expected cuts later in 2023 now seem unlikely.

The greenback fell as low as 141.565 yen, the lowest since June 21. It was last down 0.4% at 141.655. It slid nearly 1.3% on Friday.

The , which tracks the U.S. currency against a basket of major peers, was down 0.1% at 102.20 having fallen 0.87% on Friday after U.S. nonfarm payrolls increased 209,000 in June, missing market expectations for the first time in 15 months.

“I wonder if we’re moving toward a more negative dollar environment,” said Marc Chandler, chief market strategist, at Bannockburn Global Forex in New York.

“Since the end of June, U.S. interest rates have jumped: about 30 basis points on the 10-year, around 22 basis points on the two-year. And the dollar hasn’t really gotten much traction.”

The euro was last slightly up at $1.0969 after a 0.7% Friday jump.

Sterling fell 0.3% to $1.2792, having risen 0.79% the previous session to a 15-month high of $1.2850.

For markets focused on the outlook for central bank policy, particularly the Fed, attention now turns to U.S. inflation data due on Wednesday, where expectations are for core CPI to have risen 5% on an annual basis in June.

In other currencies, the Norwegian crown firmed against the dollar and euro following Norway’s inflation data. The dollar was last down 0.8% at 10.5390, while the euro dropped 0.7% to 11.5666.

In China, data on Monday showed factory-gate prices fell at the fastest pace in 7-1/2 years in June and consumer inflation was at its slowest since 2021, fuelling hopes for further support measures from Chinese authorities.

The U.S. dollar was last little changed versus the at 7.232.

The weak Chinese data dragged down the Australian and New Zealand dollars, which are often used as liquid proxies for the Chinese yuan.

The fell 0.6% to US$0.6654, while the New Zealand dollar slid 0.3% to US$0.6192.

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Currency bid prices at 10:38AM (1438 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Dollar index 102.2600 102.2900 -0.01% -1.189% +102.5600 +102.1600

Euro/Dollar $1.0968 $1.0969 -0.01% +2.35% +$1.0980 +$1.0944

Dollar/Yen 141.7200 142.2200 -0.34% +8.10% +142.9950 +141.5650

Euro/Yen 155.42 155.84 -0.27% +10.79% +156.6700 +155.3400

Dollar/Swiss 0.8885 0.8891 -0.06% -3.90% +0.8918 +0.8871

Sterling/Dollar $1.2790 $1.2841 -0.34% +5.82% +$1.2841 +$1.2751

Dollar/Canadian 1.3280 1.3279 +0.01% -1.99% +1.3304 +1.3269

Aussie/Dollar $0.6649 $0.6693 -0.65% -2.46% +$0.6696 +$0.6624

Euro/Swiss 0.9743 0.9750 -0.07% -1.53% +0.9762 +0.9740

Euro/Sterling 0.8573 0.8541 +0.37% -3.06% +0.8584 +0.8542

NZ $0.6186 $0.6209 -0.35% -2.56% +$0.6215 +$0.6167

Dollar/Dollar

Dollar/Norway 10.5500 10.6230 -0.75% +7.43% +10.6730 +10.5400

Euro/Norway 11.5748 11.6479 -0.63% +10.30% +11.6920 +11.5434

Dollar/Sweden 10.8324 10.8193 +0.22% +4.08% +10.8695 +10.8090

Euro/Sweden 11.8760 11.8503 +0.22% +6.52% +11.8985 +11.8559

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