The dollar rose during trading on Monday as investors assessed the weak jobs data released on Friday, while awaiting inflation data due this week for further clues about the Federal Reserve's interest rate path.

In trading, the dollar index, which measures the performance of the US currency against six major currencies, rose 0.2% to 99.7 points at 11:29 GMT, after hitting its lowest level since June 15 on Friday.

Conversely, speculators increased their net short positions in dollars during the last week to the highest level since December 2022, according to the committee's data.

The euro was little changed at $1.1563, near its strongest level since mid-June, while sterling was steady at $1.3496, below its highest level in three and a half weeks.

The yen fell to 158.52 yen to the dollar, continuing to reduce gains made on the back of interventions by authorities in the foreign exchange market, but it remained far from its multi-decade low of around 164 yen to the dollar, which it recorded late last month.

The Australian dollar held steady at $0.7071 ahead of the Reserve Bank of Australia's interest rate decision on Tuesday. The bank is widely expected to keep its key interest rate at 4.35% for the remainder of the year.

Economic data

Data released on Friday showed that the U.S. economy unexpectedly lost jobs in July, while job gains in the previous two months were revised sharply downward, leading to a decline in expectations that the Federal Reserve would raise interest rates next month.

Weak labor market data reinforces the importance of Wednesday's Consumer Price Index report, as investors look for clues about the Federal Reserve's monetary policy path.

Analysts believe that labor market data is a negative event for the dollar, and therefore, expectations indicate that the trend will remain negative this week. However, if the Consumer Price Index data comes in surprisingly higher than expected, markets will return to pricing in an interest rate hike as the baseline scenario.

Market expectations for an interest rate hike in September fell to around 44%, compared to 67% a week earlier. US Treasury yields also largely held onto their post-jobs declines, as the data dampened bets on a rate increase, with the 10-year Treasury yield hovering around 4.647%.

The core consumer price index is estimated to have risen 0.2% month-on-month in July, while the annual rate is expected to slow to 2.5% from 2.6% in June.

Producer price data due on Thursday and retail sales data due on Friday will provide further clues about the inflation outlook.

Watch developments in Iran and the Strait of Hormuz

Investors are still closely monitoring talks aimed at reopening the Strait of Hormuz and its potential impact on energy prices.

Iran said an agreement with Oman to establish new shipping lanes was under consideration, but noted that the United States still had to meet other conditions, adding to the uncertainty surrounding energy supplies.