The dollar hit a
three-month high against a basket of major currencies on Monday, after
solid U.S. inflation and housing data supported expectations for the
Federal Reserve to raise interest rates in coming months.
The
greenback is coming off its best weekly performance in about two
months, having risen last week after Fed Chair Janet Yellen reiterated
that U.S. interest rates will probably be lifted later in the year.
The dollar gained further support from data on Friday that showed U.S. consumer prices rose for a fifth straight month in June, while housing starts jumped and building permits surged to an eight-year high.
Against a basket of six major currencies .DXY, the dollar traded at 98.041 at 0405 GMT. It rose to 98.061 at one point, its strongest level since April 23. The dollar index rose 1.9 percent last week, its best weekly gain since May.
The dollar also edged up 0.1 percent to 124.19 yen JPY=. Yen-related trading activity was thinner than usual with financial markets in Tokyo closed on Monday for a public holiday.
The euro held steady at $1.08240 EUR=. Earlier, it hit a two-month low at $1.08205. A drop below its May low of $1.0819 would take the euro to its lowest level since late April.
The single currency has struggled even though worries about Greece exiting the euro zone have waned, at least for the time being, after Athens agreed to a debt deal with its creditors last week.
The euro has come under renewed pressure while the dollar has gained broadly, as investors shifted their focus back to the diverging outlook for monetary policies and interest rates among major economies.
"The euro's direction is probably still toward the downside," said Teppei Ino, an analyst for global markets research for Bank of Tokyo-Mitsubishi UFJ in Singapore.
In the short term, however, the market may lack fresh incentives to sell the euro further, especially with Yellen's congressional testimony out of the way, Ino said.
Greek banks are ready to open their branches across the country on Monday after a three-week shutdown, officials said, while German Chancellor Angela Merkel called for swift aid talks so Athens could also lift withdrawal limits.
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| Arrangement of various world currencies including Chinese Yuan, Japanese Yen, US Dollar, Euro, British Pound, Swiss Franc and Russian Rouble pictured in Warsaw, January 26, 2011. |
The dollar gained further support from data on Friday that showed U.S. consumer prices rose for a fifth straight month in June, while housing starts jumped and building permits surged to an eight-year high.
Against a basket of six major currencies .DXY, the dollar traded at 98.041 at 0405 GMT. It rose to 98.061 at one point, its strongest level since April 23. The dollar index rose 1.9 percent last week, its best weekly gain since May.
The dollar also edged up 0.1 percent to 124.19 yen JPY=. Yen-related trading activity was thinner than usual with financial markets in Tokyo closed on Monday for a public holiday.
The euro held steady at $1.08240 EUR=. Earlier, it hit a two-month low at $1.08205. A drop below its May low of $1.0819 would take the euro to its lowest level since late April.
The single currency has struggled even though worries about Greece exiting the euro zone have waned, at least for the time being, after Athens agreed to a debt deal with its creditors last week.
The euro has come under renewed pressure while the dollar has gained broadly, as investors shifted their focus back to the diverging outlook for monetary policies and interest rates among major economies.
"The euro's direction is probably still toward the downside," said Teppei Ino, an analyst for global markets research for Bank of Tokyo-Mitsubishi UFJ in Singapore.
In the short term, however, the market may lack fresh incentives to sell the euro further, especially with Yellen's congressional testimony out of the way, Ino said.
Greek banks are ready to open their branches across the country on Monday after a three-week shutdown, officials said, while German Chancellor Angela Merkel called for swift aid talks so Athens could also lift withdrawal limits.
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