Investing.com – The dollar traded lower against a basket of global currencies on Monday amid an uptick in safe-haven demand, following renewed geopolitical tension in the Korean Peninsula, as U.S.-South Korea military exercises got underway.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell by 0.35% to 93.01.
The greenback lost ground against safe-haven currencies like the yen and the Swiss franc after the U.S. and South Korea began computer-simulated military exercises on Monday, risking a reaction from North Korean leader Kim Jong un, who may view such exercises as preparation for an invasion of the isolated nation.
USD/JPY fell 0.30% to Y108.86 while USD/CHF fell 0.9624.
Also adding to the downbeat sentiment on the greenback was Chicago manufacturing data that undershot economists’ forecasts.
The Chicago Fed Activity Index, measuring economic activity and inflation projections, missed expectations slightly, falling 0.01% to 0.15 from the previous month.
Sterling and the euro were the main beneficiaries of the greenback’s subdued start to the week, clawing back recent losses.
GBP/USD rose to $1.2909, up 0.23% while EUR/USD rose to $1.1820 up 0.50%.
USD/CAD traded roughly flat at C$1.2582, following weaker-than-expected wholesale sales data, widely viewed as a leading indicator of consumer spending.
The slump in the dollar comes ahead of the key events due later this week, including speeches by central bankers Janet Yellen and Mario Draghi, expected to provide further direction for the beleaguered dollar.