Dollar wallows at 13-month lows as 'short' bets grow

The dollar fell to a 13-month low against a trade-weighted basket of currencies on Monday, weighed down by softening U.S. Treasury yields and weak data that is undermining the case for a further rise in interest rates this year. 

Speculative "short" bets against the U.S. dollar reached the highest since February 2013 last week, according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday.

On Monday, the dollar index, measuring the currency's strength against a basket of other currencies, fell to 93.823, its lowest level since June 2016. 

While the index has drifted lower since peaking in March this year, its decline has accelerated in recent weeks thanks to falling U.S. Treasury yields. Yields on ten-year benchmark U.S. bonds have shed 16 basis points in two weeks.

Investigations into alleged Russian meddling in the 2016 U.S. presidential election and whether there was collusion with President Donald Trump's campaign are viewed as obstacles to the administration's plans to boost economic growth and a negative for the dollar. 

Traders expect little relief for the dollar in a week marked by the U.S. Federal Reserve's regular meeting on policy, with the index on track to test the June 2016 lows of 93.451. 

Markets expect the central bank to keep policy rates on hold and odds on a hike by the end of the year have been whittled down to less than fifty percent, according to CME's Fedwatch tool.

A number of analysts have suggested playing the dollar-negative trade through the euro as improving economic data add to expectations of a gradual tightening of European monetary policy. 

By 0737 GMT on Monday, the euro was perched at $1.1647 - less than half a cent off an almost two-year high hit earlier in Asian trade.