The US Dollar Index slipped nearly 0.4% to 101.8 on Monday, retracing part of Friday’s 0.7% surge, which had marked its strongest one-day advance in almost six months. The greenback came under pressure as oil prices declined and the recent AI-driven rotation in equity markets lost momentum.
Last week’s Democratic sweep of Congress prompted investors to factor in the risk of tighter regulation and possible limits on AI-related capital expenditure. At the same time, market focus is shifting to this week’s CPI and PPI data, which are expected to show an acceleration in both annual headline consumer and producer inflation.
In this context, market-implied odds of an additional 25-basis-point Federal Reserve rate hike next month are hovering around 80%. The dollar weakened broadly, posting its sharpest declines against the Australian dollar, the euro, and the British pound.