Investing.com - The dollar extended losses against the yen and the euro on Monday, after steep falls in Chinese equities overnight added to fears that the world’s second-largest economy is slowing and added to doubts over how soon the Federal Reserve will hike interest rates.
Shares in China fell more than 8% on Monday, erasing all of the year’s gains. The decline came as Beijing held back from implementing fresh measures to support equities after markets fell 11% last week.
Financial markets have been roiled since China devalued the yuan on August 11, sparking fears that the economy may be slowing at a faster than expected rate.
Data on Friday showing that manufacturing activity in China contracted at the fastest rate in six-and-a-half years in August exacerbated fears over a China led slowdown in the global economy.
The dollar has come under pressure as mounting uncertainty over the global growth outlook and the subdued U.S. inflation outlook has prompted investors to push back expectations for an initial rate hike by the Federal Reserve.
EUR/USD rallied 1.06% to a more than six-month high of 1.1506.
The dollar was pushed lower against the yen, with USD/JPY down 1.90% to a three-month low of 119.73.
Elsewhere, the dollar was lower against the pound and the Swiss franc, with GBP/USD gaining 0.37% to 1.5749 and with USD/CHF tumbling 1.10% to 0.9362.
The Australian and New Zealand dollars were weaker, with AUD/USD losing 1.04% at six-year lows of 0.7236 and with NZD/USD plummeting 1.79% to 0.6566.
Meanwhile, the greenback rose to 11-year highs against the Canadian dollar, with USD/CAD up 0.45% at 1.3249 as ongoing weakness in oil markets continued to weigh heavily on the commodity-linked loonie.
U.S. crude futures fell below the $40 a barrel level on Monday, to the lowest level since February 2009, while Brent crude, the global benchmark, fell below $45 a barrel for the first time since March 2009.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.93% at 93.97, the lowest level since June 22.