Dollar recovers after five days of loss

The dollar index was last up 0.1% at 97.709, having hit its lowest on Monday since 28 July

The U.S. dollar made a limp recovery in early Asian trade after days of selling, ahead of the U.S. markets reopening later on Tuesday after the Labor Day holiday.

The dollar index was last up 0.1% at 97.709, having hit its lowest on Monday since 28 July after five consecutive days of loss, as investors sought alternative havens such as gold where prices traded just short of record levels.

Traders have sold the currency as U.S. President Donald Trump’s attacks on the central bank, including his decision to remove Governor Lisa Cook, raise fear that the White House is undermining the central bank’s independence at a time when the case to begin reducing interest rates is far from clear.

The Fed could be ominously poised to start its rate-cutting cycle, said Chris Weston, head of research at Pepperstone Group in Melbourne. People see the attraction of being in gold.

Bullion was on track to hit a sixth day of gain after touching its highest price since 21 April on Monday. It was last up 0.2% at $3,482.55 a troy ounce whereas silver declined 1.2% after hitting a 14-year high.

Against the yen, the dollar was 0.1% stronger at 147.33 yen, remaining in the trading channel it has sat in since the start of August.

U.S. economic data for August will be in focus later this week as market watchers try to ascertain the extent to which Trump’s policies are impacting industrial activity and the labour market. Data due include ISM’s manufacturing and services purchasing managers’ indices and the non-farm payrolls report.

The euro edged lower, last off 0.03% at $1.1707, after data released on Monday showed the HCOB euro zone manufacturing PMI expanded in August for the first time in three years. Consumer price data for the same month is due later on Tuesday.

The Australian dollar paused after five days of gain, last trading down 0.1% at $0.6549, near its highest in more than two weeks.