The dollar fell from almost a four-month high as commodities from crude oil and gas to copper and gold rebounded from their worst month in four years.
The greenback slipped a third day, its longest streak of losses in two months, even as central-bank officials struck a positive tone on progress in the U.S. economy, as traders assessed whether the Federal Reserve will raise interest rates next month. Currencies of commodity-producing nations pared losses.
“The greenback is giving back some of its gains from last week,” Minh Trang, a senior foreign-exchange trader at Silicon Valley Bank in Santa Clara, California, said by e-mail. “We had a bounce in commodity prices and a strong showing in Chinese equities overnight. That certainly was a factor.”
The Bloomberg Dollar Spot Index slipped 0.4 percent to 1,207.84 as of 5 p.m. in New York. The measure touched a four-month high on Aug. 7. The U.S. currency fell 0.5 percent to $1.1019 per euro and added 0.3 percent to 124.63 yen.
Crude oil prices rose 2.1 percent to $44.80 a barrel in New York after touching the lowest level since March. The Bloomberg Commodities Index added 2.4 percent, snapping a three-day drop. It slumped more than 10 percent in July, its worst decline since 2011.
The first U.S. rate increase in almost a decade “is close,” Atlanta Fed President Dennis Lockhart said Monday, while emphasizing that there’s no set date. Fed Vice Chairman Stanley Fischer earlier attributed low inflation -- a cause of concern for policy makers -- to temporary factors.
A jobs report on Aug. 7 showed the U.S. economy added more than 200,000 jobs and the unemployment rate remained at a seven-year low.
“There’s very little catalyst for the dollar going forward,” Daniel Brehon, a New York-based strategist at Deutsche Bank AG, said by phone. “It’s just the market trying to test both ways. We’re really finely balanced on September.”
Traders are pricing in a 52 percent probability that the Fed will raise interest rates in September, based on the assumption that the effective fed funds rate will average 0.375 percent after the first increase.
The Australian and New Zealand dollars pared declines after slumping as reports during the weekend showed China’s exports shrank more than economists estimated and producer prices fell by the most in almost six years.
“Everyone’s getting caught up in the top-line negative numbers that we saw” out of China, Mazen Issa, senior foreign-exchange strategist at Toronto Dominion Bank, said by phone from New York. “Longer term, any of the commodity currencies -- like Aussie, like the Canadian dollar -- these are structural shorts.” A short is a bet a currency will weaken.