2018.01.2902:13:00UTC+00Dollar Climbs but Continues to Struggle as US Policy Doubts Persist

The dollar climbed from lows on Monday but struggled to move ahead from six consecutive weeks of losses on its evaporating yield advantage and doubts over the U.S. administration's commitment to a strong currency.

The dollar index against a basket of six major currencies increased 0.2 percent to 89.215, extending its rebound from 88.429, a three-year low set on Thursday.

The currency was slightly buoyed by U.S. GDP data on Friday, which showed strong domestic consumption and capital spending even though the headline figure was weaker than expected due to a rise in imports.

Traders are expecting more headwinds for the dollar, which has been pummeled by renewed worries that President Donald Trump may use currency policy as a tool to press other countries to get better “deals” on trade.

Treasury Secretary Steven Mnuchin gave U.S. currency bears a major boost last week with a tacit endorsement of a weak dollar. While Trump tried to row back from those comments, the damage had already been done and the dollar's downturn since November showed little sign of abating.

The greenback is also losing its relative yield attraction for investors. Short-term interest rates are expected to rise in other countries as the European Central Bank and many others start to scale back their easy monetary policy.

Against the yen, the dollar rose 0.1 percent to 108.72 yen, after notching a low of 108.28 yen on Friday, its lowest level since mid-September.

The euro traded at $1.2400, down 0.2 percent and off its three-year high of $1.2538 hit on Thursday.

The Australian dollar held strong at $0.8109 after hitting a 20-month peak of $0.8136 on Friday.