The euro strengthened on Monday after German inflation data, while commodity currencies rose on hopes for a turnaround in China's economy and the Japanese yen steadied as traders reacted to the new prime minister's call for a snap election.
The dollar, which was hovering near a one-year low against a basket of peers, will be shaped by non-farm payrolls data on Friday that will give the latest indication on the health of the U.S. economy, and the scale of rate cuts required in the next few months.
Expectations of significant U.S. monetary easing this year, which the Federal Reserve met with a recent 50-basis-point rate reduction, have sent the dollar lower against most majors in recent weeks.
The euro was at $1.1194, up 0.25% on the day, and strengthening a fraction after German state data suggested that national inflation was easing, though not as significantly as last week's figures from France and Spain.
The currency was steady on the day against the pound at 83.43 pence, but languishing around two-year lows.
The Australian and New Zealand dollars hit 2024 highs as rate cuts and expectations of fiscal support in China raised hopes of an improvement in the slowing economy and drove gains in Chinese markets and everything exposed to China's growth.
The Australian dollar hit a 20-month high of $0.6941, and the New Zealand dollar rose to $0.6375, its highest level in 14-1/2 months.
Both units gained on European currencies, with the euro falling as low as A$1.6082 to its lowest since mid-July.
The Japanese yen was also in focus as Shigeru Ishiba - a former defence minister and erstwhile critic of aggressively easy policy - who last week won the leadership of the ruling Liberal Democratic Party said he would call a general election for Oct. 27.
The yen surged on Friday, and edged out to a one-week high of 141.65 per dollar in the Asian hours, but further moves were limited as Ishiba told public broadcaster NHK that from the government's standpoint, policy must remain accommodative as a trend, given economic conditions.
The dollar was last up 0.17% at 142.45 yen.
Sterling was sitting out of most of the drama, up 0.2% on the dollar at $1.3402 and the Swiss franc softened, with the euro up 0.7% at 0.9441 francs, and the dollar 0.4% higher at 0.8437.
Source: Reuters
