Investing.com - The dollar fell to two-month lows against a basket of other major currencies on Monday following the release of upbeat U.S. housing data, while the pound rose to its highest level in almost six years.
Market sentiment was boosted after data showed that U.S. pending home sales rose to an eight-month high in May, offsetting another report showing that manufacturing activity in the Chicago region declined to a three month low in June.
Pending home sales jumped 6% on a month-over-month basis in May, rising to the highest level since last September. It was the largest increase since August 2010 and easily outstripped forecasts of 1.5%.
The Chicago purchasing managers’ index declined to 62.6 this month from 65.5 in May, compared to expectations for a reading of 63.0.
Investors were turning their attention to the U.S. nonfarm payrolls report, due to be released one day early on Thursday, for further indications on the strength of the recovery.
EUR/USD hit highs of 1.3688, the most since May 21 and was last up 0.26% to 1.3685.
The euro remained supported after preliminary data earlier Monday showed that the annual rate of inflation in the euro zone remained unchanged at 0.5% in June, easing pressure on the European Central Bank to announce fresh monetary easing measures.
Meanwhile, USD/JPY touched a five-week low of 101.24 and USD/CHF dropped 0.46% to 0.8865.
GBP/USD added 0.31% to trade at 1.7089, the highest since October 2008.
Demand for sterling continued to be underpinned by expectations that the Bank of England will raise interest rates before the end of the year.
AUD/USD rose 0.17% to 0.9437, while NZD/USD was down 0.26% to 0.8752, off lows of 0.8728.
The Canadian dollar was hovering near its 2014 highs, with USD/CAD at 1.0656. The pair rose to session highs of 1.0697 earlier Monday after official data showed that the Canadian economy expanded by just 0.1% in April, below forecasts for a 0.2% increase.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.29% to two-month lows of 79.85.