Investing.com - The dollar rose to fresh 14-month highs against the other major currencies on Tuesday, as heightened expectations for an early hike in U.S. interest rates bolstered demand for the greenback.
USD/JPY rose to six year highs of 106.34 and was last up 0.23% to 106.25.
The yen remained under pressure after data on Monday showing that Japan’s second quarter economic contraction was larger than initially estimated, and another report showing that the country’s current account surplus fell short of expectations in July.
The weak data raised expectations for further easing measures from the Bank of Japan to stimulate the economy.
In contrast, the Federal Reserve is expected to wind up its asset purchase program in October and to start raising interest rates sometime in mid-2015. A study by the San Francisco Fed published on Monday indicated that central bank officials see rates rising earlier than markets expect.
The euro fell to fresh 14-month lows against the dollar, with EUR/USD touching lows of 1.2859, the weakest since July 2013.
The euro remained weaker after the European Central Bank unexpectedly cut rates to record lows across the euro zone last week and unveiled new easing measures in a bid to shore up the faltering recovery and boost inflation.
The pound eased back from 10 month lows after data showed that U.K. industrial production posted its largest increase in five months in July, but gains were held in check as concerns over the prospects of Scottish independence continued to rattle investors.
GBP/USD was up 0.11% to 1.6123, off the lows of 1.6064 hit overnight when a new opinion poll showed that support for Scottish pro-independence voters increased ahead of next week’s vote.
Uncertainty over what currency an independent Scotland would use, as well as concerns over how much of the U.K. national debt it would take on have prompted investors to exit positions in sterling.
USD/CHF was steady near one year highs at 0.9354.
The Australian and New Zealand dollars were little changed at 0.9284 and 0.8275 respectively, while USD/CAD eased up 0.12% to 1.0986.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, touched 14-month peaks of 84.65 and was last at 84.46.