By Karen Brettell
NEW YORK (Reuters) - The dollar was mixed on Monday before a week heavy with speeches by Federal Reserve officials that will be watched for further clues on interest rate policy and as investors monitored developments in the Middle East.
Traders are evaluating whether the U.S. central bank may hike interest rates again as it battles to bring inflation closer to its 2% annual target.
"The market is going to be focused on do we get a reacceleration in the economy early next year and does that feed into inflationary pressures," said Edward Moya, senior market analyst at OANDA in New York.
"The market is kind of getting confident that the Fed is done raising rates, but we'll see if geopolitical risks ... if the global energy crisis complicates what happens with inflation throughout the winter."
Fed Chairman Jerome Powell will speak on Thursday, during a busy week of speeches by regional bank heads. Fed officials will enter into a blackout period on Oct. 21 before the Fed's Oct. 31–Nov. 1 meeting.
Chicago Fed President Austan Goolsbee said it is "undeniable" that the slowdown in U.S. inflation is a trend rather than a momentary blip, despite a recent string of economic data showing persistent pressure on some prices.
Philadelphia Fed President Patrick Harker said on Monday the current level of interest rates has nearly killed off access to the housing market for those looking to get in for the first time.
Fed funds futures traders are pricing in a 33% chance of an additional interest rate hike this year, according to the CME Group's (NASDAQ:CME) FedWatch Tool.
The dollar index fell 0.29% to 106.23. It reached 107.34 on Oct. 3, the highest since November 2022.
Bank of America (NYSE:BAC) analysts Athanasios Vamvakidis and Michalis Rousakis noted last week that investors have appeared skeptical of the greenback in recent weeks, and have been selling rallies in the currency.
The euro gained 0.40% to $1.0554. It fell to $1.0448 on Oct. 3, the lowest since December 2022.
The Israeli shekel weakened on Monday, briefly hitting the psychologically key level of four per U.S. dollar for the first time since 2015, on investor jitters over Israel's war with the Palestinian militant group Hamas.
Israeli forces kept up their bombardment of Gaza on Monday after diplomatic efforts to arrange a ceasefire to allow foreign citizens to leave and aid to be brought into the besieged Palestinian enclave failed.
The Bank of Israel said last week it will sell up to $30 billion of foreign currency in the open market to maintain stability in the currency and "to provide the necessary liquidity for the continued proper functioning of the markets."
Traders also remain focused on the Japanese yen for potential intervention in the currency.
The dollar was flat against the currency at 149.55, close to the sensitive 150 level. Some traders see an increased potential for Japanese authorities to intervene to support the currency if it weakens past that level.
The yen reached 150.17 on Oct. 3, the weakest in a year, before a brief sharp rally.
On Friday, Japan's top currency diplomat Masato Kanda said authorities will take appropriate action against a backdrop of excessive moves in the yen when needed, adding interest rates are merely one factor in determining exchange rates.
The New Zealand dollar rose 0.71% to $0.5925.
The country's center-right National Party will form a new government with its preferred coalition party ACT.
Poland's zloty rallied to 4.2068 against the U.S. dollar, the strongest since Sept. 6 and reached 4.4407 against the euro, the strongest since Aug. 15.
Poland's liberal, pro-EU opposition on Monday looked on track to form the next government after official partial results and exit polls showed the ruling nationalists losing their parliamentary majority.
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Currency bid prices at 3:05PM (1905 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Dollar index 106.2300 106.5600 -0.29% 2.648% +106.6100 +106.2200
Euro/Dollar $1.0554 $1.0511 +0.40% -1.51% +$1.0565 +$1.0504
Dollar/Yen 149.5450 149.5550 -0.01% +14.05% +149.7550 +149.3300
Euro/Yen 157.82 157.18 +0.41% +12.49% +157.9800 +157.1700
Dollar/Swiss 0.9002 0.9026 -0.25% -2.63% +0.9042 +0.8997
Sterling/Dollar $1.2211 $1.2145 +0.54% +0.97% +$1.2216 +$1.2136
Dollar/Canadian 1.3616 1.3658 -0.30% +0.50% +1.3660 +1.3607
Aussie/Dollar $0.6340 $0.6297 +0.70% -6.98% +$0.6345 +$0.6299
Euro/Swiss 0.9499 0.9481 +0.19% -4.00% +0.9523 +0.9483
Euro/Sterling 0.8642 0.8649 -0.08% -2.28% +0.8671 +0.8641
NZ $0.5925 $0.5885 +0.71% -6.67% +$0.5929 +$0.5900
Dollar/Dollar
Dollar/Norway 10.9290 11.0090 -0.70% +11.39% +10.9680 +10.9180
Euro/Norway 11.5385 11.4688 +0.61% +9.96% +11.5639 +11.4836
Dollar/Sweden 10.9173 11.0121 -0.56% +4.89% +11.0363 +10.9130
Euro/Sweden 11.5227 11.5877 -0.56% +3.35% +11.6058 +11.5178