Investing.com - The dollar dropped to two-month lows against the other major currencies on Monday, as Friday's downbeat Chinese factory data fuelled concerns over global economic growth and dampened expectations for a September rate hike by the Federal Reserve.
EUR/USD climbed 0.87% to a more than six-month high of 1.1481.
Data on Friday showed that manufacturing activity in China contracted at the fastest rate in six-and-a-half years in August, exacerbating fears over a slowdown in the world’s second-largest economy.
The preliminary reading of the Caixin China manufacturing purchasing managers' index came in at 47.1, down from July's final reading of 47.8.
It was the weakest level since March 2009 and was well below the 50 level separating expansion from contraction.
Financial markets have been roiled since China devalued the yuan on August 11, sparking a selloff in equities, commodities and emerging-market assets.
The dollar has come under pressure as mounting uncertainty over the global growth outlook and the subdued U.S. inflation outlook has prompted investors to push back expectations for an initial rate hike by the Federal Reserve.
The dollar was sharply lower against the yen, with USD/JPY down 1.20% to a three-month low of 120.57.
Elsewhere, the dollar was lower against the pound and the Swiss franc, with GBP/USD adding 0.13% to 1.5714 and with USD/CHF shedding 0.23% to 0.9445.
The Australian and New Zealand dollars were weaker, with AUD/USD losing 0.98% at six-year lows of 0.7240 and with NZD/USD tumbling 1.40% to 0.6593.
Meanwhile, the greenback rose to 11-year highs against the Canadian dollar, with USD/CAD up 0.40% at 1.3243 as ongoing weakness in oil markets continued to weigh heavily on the commodity-linked loonie.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.60% at 94.27, the lowest level since June 22.