Investing.com – The dollar held onto modest gains against other majors on Monday, as the greenback began to recover from sharp losses posted the previous week amid concerns over the impact of a second incoming hurricane and sustained tensions with North Korea.
Trading was expected to remain quiet with no major U.S. data to be released throughout the day.
The dollar regained some strength following an official downgrading of Hurricane Irma’s strength to Category 1, as the storm pummeled Florida over the weekend after devastating much of the Caribbean.
Massive storm surges have flooded areas across South Florida, while downed trees and power lines have left over 2 million residents without power.
U.S. President Donald Trump said on Saturday that he will ask Congress to speed up its efforts to overhaul the U.S. tax code, citing the potential impact of Hurricane Irma.
Market participants had been worried about a potential North Korean missile test on Saturday, to mark the anniversary of the founding of the nation.
However,investors were relieved to learn that Pyongyang chose to observe the 69th anniversary of its founding only by honoring the scientists behind the massive nuclear test it conducted last week.
The euro fell below the $1.20 level after European Central Bank Executive Board member Benoit Coeure said that persistent exogenous shocks to the exchange rate could lead to unwarranted tightening of financial conditions with undesirable consequences for inflation.
The remarks came after ECB President Mario Draghi indicated last week that the bank may start tapering its massive stimulus program this autumn.
Meanwhile, USD/CAD slid 0.33% to 28-month low of 1.2120.
The Chinese yuan took a beating on Monday, as CNY/USD dropped 0.65% to 0.1533 after China’s central bank was reportedly planning to scrap reserve requirements for financial institutions settling foreign exchange forward yuan positions.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.13% at 91.43 by 05:20 a.m. ET (09:20 GMT), off Friday’s 32-month low of 90.99.