Investing.com - The dollar rose to fresh six year highs against the yen on Wednesday, while the euro re-approached two year lows after data showed that factory activity in the euro area slowed last month.
USD/JPY hit highs of 110.09, the most since August 2008, before retracing some of those gains to trade at 109.80, 0.16% higher for the day.
The dollar has rallied against the euro and the yen in recent months, amid expectations that the Federal Reserve is growing closer to raising interest rates, while central banks in Europe and Japan look likely to stick to a looser monetary policy stance.
EUR/USD touched lows of 1.2585, not far from Tuesday’s two year trough of 1.2570, and was last down 0.22% to 1.2603.
The drop in the euro came after research group Markit reported that the final reading of the euro zone’s manufacturing purchasing managers index ticked down to a 14-month low of 50.3 in September from 50.5 in August.
The German manufacturing PMI slid to 49.9 from 50.3 previously, falling below the 50 level that separates growth from contraction for the first time in 15 months.
The report came a day after data showed that the annual rate of euro area inflation fell to a five year low of 0.3% in September.
The weak data added to pressure on the ECB to implement additional stimulus measures to stave off the threat of deflation in the region, ahead of its monthly meeting on Thursday.
GBP/USD fell to lows of 1.6162 before recovering back to trade at 1.6203, down just 0.06% for the day.
Sterling slipped after data showed that output in the U.K. manufacturing sector slowed to a 17 month low in September.
The U.K. manufacturing PMI fell to 51.6 last month from 52.2 in August. Economists had expected the index to tick up to 52.5.
The slowdown in factory activity was likely to ease pressure on the Bank of England to raise rates despite the ongoing strong recovery in the U.K.
The Swiss franc was close to 14-month lows, with USD/CHF adding 0.28% to trade at 0.9577.
Elsewhere, AUD/USD hit 10-month lows of 0.8664 overnight before pulling back to 0.8708, down 0.45% for the day after data showed that Australian retail sales rose less-than-expected in July.
NZD/USD was down 0.10% to 0.7799, while USD/CAD edged up to almost six month highs of 1.1209.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was last at up 0.16% to 86.18, not far from Tuesday’s peaks of 86.34, a high last seen in June 2010.