Investing.com - The dollar was hovering near a four-year peak against a basket of other major currencies on Monday, as Friday's upbeat U.S. data continued to support demand for the greenback.
The dollar remained supported on signs the U.S. economic recovery is on track fuelled fresh speculation the Federal Reserve could raise interest rates earlier than expected.
On Friday, the University of Michigan reported on Friday that its consumer sentiment index rose to a seven-year high of 86.9 this month from 86.4 in September.
A separate report showed that the Chicago purchasing managers' index rose to a three-and-a-half year high of 66.2 in October from 60.5 in September, confounding expectations for a reading of 60.0.
The yen hit fresh seven-year lows against the dollar, with USD/JPY up 0.44% at 112.81 as the Bank of Japan's surprise decision on Friday to introduce further easing measures continued to weigh.
The yen came under broad selling pressure after the BOJ said it would raise its monetary base target to an annual increase of ¥80 trillion from ¥60-70 trillion yen in order to increase the chances of approaching its inflation goal.
EUR/USD shed 0.23% to 1.2496, the lowest level since August 2012.
The single currency came under pressure after Markit research group said that the German manufacturing purchasing managers' index fell to 51.4 in October from a reading of 51.8 the previous month, confounding expectations for the index to remain unchanged.
Markit's manufacturing PMI for the entire euro zone ticked down to 50.6 this month from 50.7 in September. Analysts had expected the index to remain unchanged.
The pound was steady against the dollar, with GBP/USD trading at 1.6003 and the Swiss franc slipped lower, with USD/CHF adding 0.21% to 0.9645.
Markit said the U.K. manufacturing PMI rose to 53.2 this month from 51.6 in September. Analysts had expected the index to slip to 51.2 in October.
Elsewhere, the commodity linked dollars were steady to lower, with AUD/USD sliding 0.56% to 0.8748 and NZD/USD falling 0.20% to 0.7778, while USD/CAD inched up 0.01% to 1.1267.
The Aussie weakened after official data earlier showed that building approvals in Australia dropped 11.0% in September, compared to expectations for a 0.9% decline. August's figure was revised to a 3.4% increase from a previously estimated 3.0% rise.
The U.S. dollar index, which tracks the performance of the greenback against a basket of six major currencies, was up 0.14% to 87.17, the highest level since June 2010.
Later in the day, the U.S. was to publish a report by the Institute of Supply Management on manufacturing activity.