On Monday the greenback was lower versus the yen, euro impacted by a sharp drop in Chinese stocks overnight which added to worries over the growth in the world's second largest economy. This, in turn, spurred concerns over the timing of the Fed rate hike.
Shares in China fell 8.5% on Monday, wiping out all of the year’s gains. The drop came as the authorities held back from launching fresh measures to buoy equities after markets fell 11% last week.
Financial markets have been jittery since China devalued its currency on August 11, sparking fears that the economy may be shrinking at a faster than expected pace.
Data released Friday showed that manufacturing activity in the country contracted at the fastest rate in six-and-a-half years in August. This deepened fears over a China led slowdown in the global economy.
EUR/USD rallied 2.53% to a more than six-month high of 1.1672.
The dollar was pushed lower against the Japanese currency, with USD/JPY down 3.97% to a three-month low of 117.21.
The buck was lower against the pound and the Swiss franc, with GBP/USD gaining 0.60% to 1.5785 and with USD/CHF tumbling 1.71% to 0.9304.
The commodity-linked Australian and New Zealand dollars were weaker, with AUD/USD losing 1.94% at six-year lows of 0.7170 and with NZD/USD dropping to 0.6264.
Meanwhile, the greenback rose to 11-year highs against the Canadian dollar, with USD/CAD up 0.71% at 1.3281 as lingering weakness in oil markets continued to pressure the commodity-linked loonie.
U.S. stocks
plunged to lowest levels since last October.
The Dow Jones Industrial Average dropped 1000 points, or 6%, to 15,441.
The S&P 500 opened 100 points, or 4.9%, lower at 1,874. The
benchmark index is down more than 10% from its peak reached on May 21.
The Nasdaq Composite began the day down 360 points, or 7.6%, to 4,349.
Treasury yields dropped overnight and in early New York trading as a
global stock selloff spurred demand for safe-haven assets like Treasury
bonds. Bond yields fall when prices rises and vice versa.
The 10-year
Treasury yield dropped below 2% for the first time in nearly four months
and traded 7.8 basis points down on the day at 1.976%, its lowest point
since April 28. Monday’s moves came after the
10-year yield trimmed a total of 14.4 basis points last week - a weighty move for Treasurys and the largest weekly drop since March
20.
The 30-year Treasury yield fell 7.4 basis points to 2.670% and the 2-year Treasury yield shaved off 5.3 basis points to 0.576%.
