Investing.com – The dollar moved higher against a basket of the other major currencies on Monday, while the euro was pressured lower amid uncertainty in the aftermath of an independence referendum in Spain’s Catalonia.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.56% to 93.44 by 03:43 AM ET (07:43 GMT).
Demand for the dollar was underpinned by higher U.S. Treasury yields. The yield on 10-year U.S. Treasuries rose to 2.364% overnight from Friday’s U.S. close of 2.326%.
Yields rose amid speculation that U.S. President Donald Trump is considering former Federal Reserve Governor Kevin Warsh to succeed current Fed Chair Janet Yellen at the central bank.
Warsh is seen as more hawkish than Yellen so his appointment could lead to a faster pace of interest rate hikes.
The dollar has risen in recent weeks as investors grow more optimistic about the prospect for U.S. rate hikes and tax cuts that some expect to boost the U.S. economy.
The dollar was higher against the yen, with USD/JPY rising 0.47% to 113.02.
In Japan, data on Monday showed that confidence among manufacturers hit the highest level in ten years in September boosted by the weaker yen and strong global demand.
The euro remained on the back foot, with EUR/USD down 0.65% to 1.1738 as Spain’s prime minister defended the violent police response to the independence vote in Catalonia, which left hundreds injured.
Investors were monitoring the situation as the Spanish government attempted to calm tensions in the region.
The euro also slipped lower against the yen and the pound, with EUR/JPY down 0.14% to 132.69 and EUR/GBP losing 0.14% to trade at 0.8808.
The pound was lower against the stronger dollar, with GBP/USD down 0.53% at 1.3326 ahead of UK manufacturing data that was expected to show that growth slowed slightly but remained solid last month.
The Australian and New Zealand dollars were also weaker, with AUD/USD down 0.43% at 0.7801 and NZD/USD losing 0.77% to trade at 0.7172.