Dollar finds footing after two-week lows in Fed's wake

NEW YORK: The dollar stabilized after hitting two-week lows on Monday, as the greenback attempted to recover from Friday's drop on comments from US Federal Reserve Chair Jerome Powell that were interpreted as dovish.

The dollar had one of its biggest daily percentage declines of the month on Friday after Powell said tapering could begin this year, but the central bank was in no hurry to raise interest rates.

The dollar index hit a two-week low at 92.595 before firming slightly, and was last up 0.001% at 92.671.

"The market is still digesting Powell's dovish tapering speech and you are probably seeing the market is a little confused that Treasury yields are not getting the go-ahead for lift-off here, and that is going to be data dependent on everything with inflation and the job markets," said Edward Moya, senior market analyst at OANDA in New York.

Pakistani rupee posts further gain against US dollar

Benchmark 10-year notes last rose 5/32 in price to yield 1.297%, from 1.312% late on Friday as investors began to turn their focus to Friday's US payrolls report, which will provide more insight into the Fed's likely policy path.

Expectations are for non-farm payrolls to increase by 750,000 in August, with the unemployment rate forecast to dip to 5.2% from 5.4%. Other data likely to be eyed this week include inflation figures from Europe as well as gauges of the US and Chinese manufacturing sectors.

The dollar briefly ticked higher following data on Monday that showed pending home sales declined for a second straight month in July.

The euro was up 0.06% to $1.1799 after hitting its highest in more than three weeks at 1.181.

The Japanese yen weakened 0.03% versus the greenback at 109.90 per dollar.

Overall trade in Europe was subdued because of a public holiday in Britain. Moya noted the holiday tends to disrupt normal currency flows and month-end rebalancing could also have helped the dollar somewhat.

For the month the dollar index has gained about 0.7%.