The dollar rose broadly on Monday, starting the new quarter on a positive note, bolstered by higher US government bond yields and a private report that showed manufacturing activity increased to its strongest level in nearly three years. The greenback just came off its worst quarter since 2010 last week as overseas central banks have signalled they are considering whether to begin reducing monetary stimulus in light of evidence their local economies are doing better.
"The market is debating whether central banks could follow through with their tightening. So far the data are going central banks' way," said Steven Englander, head of research and strategy at Rafiki Capital Management in New York. Earlier Monday, the Institute for Supply Management said its index of national factory activity rose to 57.8 last month, the highest reading since August 2014.
This upbeat factory report propelled benchmark 10-year Treasury yield to 2.346 percent, the highest in nearly seven weeks, Reuters data showed. A closely watched index that tracks the dollar against six major currencies was 0.6 percent at 96.192, rebounding from its lowest level since early October seen on Friday.
The dollar index shed 4.71 percent in the second quarter, its steepest quarterly loss since the 8.49 percent drop in third quarter of 2010. The greenback climbed to a six-week high against the yen at 113.37 yen. It was last up 0.9 percent at 113.34 yen. The euro retreated from its highest in more than a year against the dollar last week. It was last down 0.5 percent at $1.1369.
Currency trading activity was muted ahead of the US July Fourth holiday. US financial markets will close early on Monday and will be shut on Tuesday. Ahead of Tuesday's meeting of Sweden's Riksbank, the Swedish crown was down 0.6 percent at 8.4771 crown per dollar. Any shift in the wording of the Reserve Bank of Australia's statement, also early on Tuesday, may also support the Aussie, which was 0.6 percent below Friday's close at $0.7645.
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