Forex- Dollar Dips on Rate Hike Doubts; Sterling Holding Above 1.28

Investing.com - The dollar dipped against a currency basket on Monday, adding to Friday’s losses amid uncertainty over the pace of future U.S. interest rate hikes, while the pound was holding above the 1.28 level as Brexit worries rumbled on.

The , which measures the greenback’s strength against a basket of six major currencies, edged down 0.09% to 96.25 by 03:29 AM ET (08:29 AM GMT) after falling 0.48% on Friday. The index had hit a 16-month high of 97.53 on Nov. 12.

The dollar weakened on Friday after dovish comments by Federal Reserve Vice Chair Richard Clarida, who said he saw some evidence that global growth is slowing.

Clarida also noted that U.S. interest rates are nearing a neutral rate, and being at neutral "makes sense."

Separately, Dallas Fed head Robert Kaplan said Friday he is seeing a growth slowdown in Europe and China.

The comments were seen as an indication that the Fed may pause its rates hikes sooner than had been anticipated.

The dollar was little changed against the yen, with at 112.82 after falling to two-week lows of 112.61 overnight.

Overall market sentiment remained cautious in the wake of tension between U.S. Vice President Mike Pence and Chinese President Xi Jinping at the Apec summit over the weekend.

The euro was trading near-one-and-a-half week highs against the dollar, with changing hands at 1.1420.

The pound was holding above the 1.28 level against the dollar, with rising 0.3% to 1.2872 after selling off last week amid turmoil over British Prime Minister Theresa May's draft Brexit deal.

Sterling found some support following reports that the European Union’s chief negotiator proposed extending the Brexit transition period for another two years to give the UK and EU more time to complete a trade deal.

May is struggling to keep the Brexit deal on track after several government ministers, including her Brexit secretary, resigned last week while other government ministers are attempting to mount a leadership challenge.

The pound was also higher against the euro, with slipping 0.29% to 0.8874.

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