Investing.com – The dollar rose to one-and-a-half month highs against a basket of the other major currencies on Tuesday boosted by a more optimistic outlook for U.S. interest rate increases and prospects for fiscal stimulus from Washington.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, touched a high of 93.78, the most since August 17 and was at 93.53 by 03:39 AM ET (07:39 GMT).
The dollar was boosted after data on Monday showed that U.S. factory activity acceleratedto an almost thirteen-and-a-half year high in September underscored expectations for a December rate hike by the Federal Reserve.
The dollar has risen in recent weeks as investors grow more optimistic about the prospect of higher interest rates and tax cuts that some expect to boost the U.S. economy.
Expectations that rates will rise help support the dollar by making U.S. assets more attractive to yield-seeking investors.
The dollar was higher against the yen, with USD/JPY rising 0.21% to 113.00.
The euro was little changed with EUR/USD at 1.1735, not far from the one-and-a-half month lows of 1.1695 struck overnight.
The single currency remained on the defensive after the Catalan region of Spain appeared to overwhelmingly vote in favor of independence in a referendum over the weekend that the central government had declared illegal.
The ensuing political crisis has added to concerns over political risk in the euro zone a week after German Chancellor Angela Merkel’s conservative alliance lost ground in that country’s election.
The Australian dollar was lower after the country’s central bank held rates steady on Tuesday as expected and warned that a stronger Australian dollar would weigh on growth and inflation.
AUD/USD was last at 0.7815, off 0.19% for the day after falling to a three-month trough of 0.7786 overnight.
The New Zealand dollar was also lower, with NZD/USD down 0.19% to 0.7176.