The US dollar extended its decline on Monday, with the Bloomberg Dollar Spot Index falling to its lowest level since May 15, as traders sharply scaled back expectations for a Federal Reserve interest-rate increase next month. Markets now price in only about 36 basis points of additional tightening this cycle, and the probability of a September rate hike has dropped below 30 percent, down from roughly 75 percent in late July, following unexpectedly weak US retail sales in July.
The greenback weakened 0.1 percent against the euro and 0.2 percent against the yen, while one-month options turned against the dollar for the first time since late February. The dollar also fell against the Swiss franc to 0.8090. The euro bought $1.1585 and 184.33 yen, while one dollar fetched 159.10 yen.
Asian markets advanced, with Japan's Nikkei 225 up 0.3 percent, Hong Kong's Hang Seng climbing 1.6 percent, and China's CSI 300 gaining 0.8 percent. South Korea's exchange was closed for a public holiday. Brent crude traded at $88 a barrel. Minutes from the July FOMC meeting are due Wednesday.