The dollar strengthened on Monday (August 18th) ahead of a meeting between US President Donald Trump and his counterparts from Ukraine and Europe, while attention was also focused on the Federal Reserve's Jackson Hole Symposium for policy guidance.

The euro weakened 0.2% against the dollar to $1.1680, the yen weakened by the same amount to 147.445, while the British pound weakened about 0.1% to $1.3544.

Reduced bets on a Fed rate cut next month helped the dollar find support amid previously stagnant foreign exchange market movements on Monday.

Money markets now price in an 83% chance that the Fed will cut rates by a quarter point next month, as traders reduced bets on a rate cut after a series of data including a surge in US wholesale prices last month and a solid increase in July retail sales figures.

Fed Chairman Jerome Powell is scheduled to speak about the economic outlook and the central bank's policy framework at the Jackson Hole symposium between August 21 and 23. MUFG expects the US central bank to also cut interest rates in September, but it is unlikely the Fed Chairman will give a clear signal on that this weekend, said Lee Hardman, senior currency analyst at MUFG Bank.

Powell's final speech at the conference before his term ends in May comes as he seeks to balance the Fed's two goals: stable prices and low unemployment. Inflation in the US is above the central bank's target, while recent data also points to a slowing labor market.

"The majority of investors expect further dollar weakness, but a minority, who prefer to buy at current levels and see no convincing evidence of weak US growth, also has a sizable following," said Kit Juckes, chief FX strategist at Societe Generale, in a note on Monday, citing client interactions.

The dollar strengthened 0.1% against a basket of major currencies on Monday, but has weakened more than 9.5% so far through 2025. The main event for investors on Monday will be the White House meeting between Trump and Volodymyr Zelenskiy, which will be attended by several European leaders, as Washington urges Ukraine to quickly accept a peace deal to end Europe's deadliest war in 80 years.

Trump met with his Russian counterpart, Vladimir Putin, on Friday and agreed that a peace deal should be pursued without a ceasefire. "Financial markets continue to trade as if there is a path to peace-which remains undefined," said an ING analyst note. "With risk assets bid up and energy prices on offer, we expect the dollar to remain under some pressure as dollar-based investors continue to invest," the note said.

Trump called on Ukraine to abandon hopes of regaining annexed Crimea or joining NATO, as he prepared to host Zelenskiy and European leaders in Washington to urge Kyiv to accept a peace deal with Russia. In other currencies, the Swiss franc was little changed at 0.80965, while the Australian dollar rose 0.1% to $0.6515 and the New Zealand dollar rose 0.2% to $0.5941. (alg)

Source: Reuters