Dollar Steadies in Narrow Range as Sterling and Yen Face Pressure from Hawkish Antipodean Central Banks

The US Dollar Index was confined to a tight 99.20-99.65 range on Monday, August 31, as currency markets assessed whether Friday's dollar rally had staying power. The greenback had surged late in the prior week, but traders were cautious about its durability heading into a new month.

Pound Sterling came under broad pressure across multiple pairs. GBP/USD found tentative support just below its 20-day exponential moving average, while GBP/NZD slid to a 12-week low and GBP/AUD touched its weakest level since late June. The twin threats driving Sterling lower against the Antipodean currencies are hawkish central bank expectations: the Reserve Bank of Australia has seen a notable uptick in rate hike bets, with economists from Goldman Sachs and Commonwealth Bank pulling forward their forecasts for another increase to as early as September, and the Reserve Bank of New Zealand is also expected to raise rates at its upcoming meeting following a split vote to hold in May that signaled further tightening ahead. The Bank of England, by contrast, has struck a more cautious tone, leaving the Pound vulnerable on crosses.

USD/JPY faced selling pressure above the 160.00 level, a technically significant threshold that has drawn consistent resistance. Silver gained 0.40% on Monday after a sharp late-week decline, supported by renewed US-Iran tensions that lifted safe-haven demand while also stoking inflation concerns.