Investing.com - The dollar edged lower against the yen on Monday as concerns over the conflict in Iraq supported safe haven demand, while the pound touched five year highs amid growing expectations that the Bank of England will raise rates sooner than expected.
USD/JPY slipped 0.10% to 101.88 from 102.03 late Friday.
Concerns over the ongoing Sunni insurgency in Iraq continued to weigh on market sentiment on Monday, amid fears over the impact of reduced oil supply on global growth.
In the U.S., data on Monday showed that manufacturing activity in the Empire state expanded more quickly than forecast in June, while a separate report showed that industrial production rose more-than-expected in May.
Meanwhile, the International Monetary Fund cut its forecast for U.S. economic growth this year on Monday, saying that the unusually harsh winter, along with the “still-struggling housing market” would act as a drag on growth.
The IMF said it now expects the U.S. economy to expand 2% in 2014, down from its forecast of 2.8% in April.
Elsewhere, GBP/USD rose to session highs of 1.7011, the highest since August 6, 2009, and was last up 0.10% to 1.6984.
Sterling continued to remain supported after BoE Governor Mark Carney said last Thursday that U.K. interest rates could rise sooner than expected as the economic recovery continues to gain momentum.
The euro pushed higher, with EUR/USD rising 0.21% to 1.3568, pulling back from the four month trough of 1.3502 struck earlier this month.
Data on Monday confirmed that the annual rate of inflation in the euro zone remained unchanged at a four-and-a-half year low of 0.5% in May. The European Central Bank targets an annual inflation rate of close to but just under 2%.
The euro has weakened broadly since the ECB cut rates to record lows and imposed negative rates on commercial lenders for the first time earlier this month, in order to combat the threat of persistently low inflation in the euro area.
The dollar fell to session lows against the Swiss franc, with USD/CHF down 0.30% to 0.8972.
NZD/USD edged up 0.16% to 0.8678, while AUD/USD was little changed at 0.9397 and USD/CAD traded at 1.0850.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.23% to 80.57.