The dollar pushed higher against the yen and the Swiss franc on Monday, but safe haven demand continued to remain supported as a selloff in some emerging currencies continued into a second week.
USD/JPY hit highs of 102.77, and was last up 0.26% to 102.60, recovering from seven week lows of 101.76.
The dollar struggled to build on gains as a broad based exodus from emerging market currencies continued on Monday, amid concerns over the impact of the Federal Reserve scaling back its stimulus program and a possible slowdown in China.
Turkey’s lira spiraled to the latest in a series of record lows against the dollar, while South Africa’s rand, the Russian ruble and the Argentinian peso were trading at multi-year lows against the dollar.
Market participants were looking ahead to the outcome of the Fed’s monthly meeting on Wednesday, amid expectations for a reduction in its bond buying program to USD65 billion from the current USD75 billion.
USD/CHF was up 0.27% to 0.8967 after falling to three-week lows of 0.8902 on Friday.
Elsewhere, the euro was little changed against the dollar, with EUR/USDdipping 0.01% to 1.3674. The pair hit session highs of 1.3717 earlier after data showed that German business confidence rose to the highest level in two-and-a-half years in January.
The German research institute Ifo said its business climate index rose to 110.6 in January, above forecasts for a reading of 110.0 and up from 109.5 in December, indicating that businesses in the euro zone’s largest economy had a strong start to the year.
GBP/USD hit session highs of 1.6570 and was last up 0.49% to 1.6561. Sterling remained supported after a sharp fall in the U.K. unemployment rate heightened expectations that the Bank of England may raise interest rates sooner than previously thought.
The Australian dollar backed off three-and-a-half year lows against the U.S. dollar with AUD/USD up 0.67% to 0.8740, after falling to lows of 0.8659 on Friday, the lowest level since July 2010.
NZD/USD was up 0.29% to trade at 0.8237, ahead of Thursday’s central bank rate review, with markets split on whether the Reserve Bank will raise rates at this meeting or the next.
The Canadian dollar extended its pullback from four-and-a-half year lows against the U.S. dollar, with USD/CAD down 0.21% to 1.1064.
The U.S. dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, edged up 0.01% to 80.57.
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