Dollar remains close to session highs as sterling slide continues

The dollar traded close to session highs against a basket of global currencies, as sentiment on the greenback remained positive in the wake of upbeat comments from the Federal Reserve while a slump in the pound supported further upside momentum.

A dent in sterling pushed the dollar to session highs, after Bank of England Governor Mark Carney stifled rate hike expectations, saying that now is not the time to raise rates, pointing to “anaemic” wage growth and mixed signals on consumer spending and business investment.

GBP/USD fell to $1.2626, down 0.88%.

The slump in sterling added to recent positive sentiment on the greenback, on the back of comments from the New York Federal President William Dudley on Monday.

Dudley stoked rate hike expectations, warning that halting U.S. interest rate increases could be dangerous for the economy, insisting continued progress in the jobs market will push wages higher, reviving the recent slowdown in inflation.

Dudley’s comments echoed that of other senior central bankers who worry that delays in monetary policy tightening could result in a situation in which the Fed could be forced to raise rate rapidly.

Meanwhile, Chicago Fed President Charles Evans said on Monday it may be worthwhile for the U.S. central bank to wait until year-end to decide whether to raise interest rates again.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.24% to 97.46.

EUR/USD pared gains to trade at $1.1122, down 0.24%, while EUR/GBP rose by 0.71% to 0.8813, as investors continue to monitor weekly Brexit negotiation meetings between the UK and the EU, which got underway on Monday.

USD/CAD traded at C$1.3262, up 0.33%, as a slump in oil prices continued to weigh on the oil-linked Canadian dollar.

The dollar traded roughly flat against its Japanese counterpart, with USD/JPY at Y111.53.