Dollar Holds Steady Amid Uncertain Fed Rate Cuts

The dollar remained stable on Monday as investors speculated on potential Federal Reserve rate cuts. Meanwhile, yen gains faded, and U.S. inflation data is awaited for clearer indications. Mixed job market signals in the U.S. have left traders unsure whether the Fed will impose a 25 or 50 basis-point cut.

The dollar remained stable within narrow ranges on Monday as investors speculated on the scale of a potential Federal Reserve rate cut later this month. The yen, previously benefiting from safe-haven status, reduced some of its recent gains, reflecting uncertainty in the markets.

In China, August consumer prices rose at their fastest rate in six months, but worsening producer price deflation dampened economic prospects, affecting the yuan in the Asian session. Onshore yuan weakened by 0.27%, and offshore yuan eased by 0.2%.

U.S. jobs data from Friday failed to clarify the Fed's future rate cut strategy, leaving the market undecided between a 25-basis-point and a 50-basis-point reduction. Mixed job market indicators suggest a cooling economy, but not sufficiently to trigger immediate concern. Meanwhile, Japanese economic data showed slower-than-expected growth in Q2, impacting the yen, while the euro and sterling saw slight shifts against the dollar. The Fed is poised to begin rate cuts at its upcoming meeting, with inflation data seen as the next pivotal indicator.

(With inputs from agencies.)