The dollar rose modestly against the other majors on Monday, rebounding off multi-month lows in some cases as investors sought to navigate though a choppy confluence of political and monetary policy factors following a weekend assassination attempt against Donald Trump.

Markets opened the week apparently more convinced that the Republican former president would win the November election, leading to rising longer dated bond yields and a steeper curve.

Meanwhile, Chair Jerome Powell said that policymakers are awaiting more data to help build confidence that inflation is retreating, a position that appears to have changed little in the wake of unexpectedly soft consumer price inflation figures reported last week.

Still, that CPI report has left the market convinced that the Fed will ease in September and factoring in the possibility of as many as three cuts this year, even as investors position for more fiscal stimulus, higher bond yields and heavier trade tariffs in the event of a Trump victory.

Next up, investors will scrutinize U.S. retail sales on Tuesday.

U.S.
Treasury yields eased 1-2bp at the front end and rose 1-5bp from the belly through the long bond.
The 2s-10s curve steepened about 5bp to an increasingly less inverted -21.9bp.

The S&P 500 was holding onto gains of 0.47% by New York afternoon trade, having retreated from a record high hit earlier in the session.

WTI eased 0.29%, as worries about demand in top importer China offset support from OPEC+ supply restraint and ongoing tensions in the Middle East.

Copper fell 1.65% as weak demand prospects in top consumer China were emphasised by slow economic growth, weak lending numbers and rising inventories.

Gold firmed 0.47%, hovering near a more than one-month high hit last week, aided by hopes for interest rate cuts from the Fed.

Heading toward the close: EUR/USD -0.1%, USD/JPY +0.16%, GBP/USD -0.15%, AUD/USD -0.32%.

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