Fears the US recovery is faltering drove the dollar to a three-month low on Monday against a basket of currencies while strong European earnings pushed sterling to a six-month high against the greenback. The euro neared $1.32 for the first time since early May, with its rally picking up steam after the currency broke above $1.3125, an important technical level.
The Australian dollar hit a three-month peak after data showed Chinese manufacturing expanded for a 17th straight month. Sterling hit a six-month high versus the dollar of $1.5897 and hit a four-week high against the euro. The dollar fell 0.1 percent to 86.36 yen, not far from an eight-month low of 85.95 yen hit late last week. The dollar also fell against the Australian and Canadian dollars, with the Aussie hitting a three-month peak at $0.9136. Strong Chinese data tends to help the Aussie dollar.