Investing.com - The dollar remained near 14-month highs against the other major currencies on Monday, as investors awaited the outcome of the Federal Reserve's two-day policy meeting this week.
Demand for the dollar continued to be underpinned by expectations for an early hike in U.S. interest rates.
The Fed was expected to cut its asset purchase program by another $10 billion at its upcoming policy meeting on Wednesday, which would keep it on track for winding up the program in October, and to start raising interest rates sometime in mid-2015.
USD/JPY held steady, just below six-year highs, easing 0.09% to 107.25 as the diverging monetary policy stance between the Fed and the Japanese central bank continued to pressure the yen lower.
The yen came under pressure last week after Bank of Japan Governor Haruhiko Kuroda said that the bank would be prepared to immediately loosen monetary policy or implement other measures if its 2% inflation target becomes difficult to meet.
The euro fell against the dollar, to trade close to 14-month lows with EUR/USD down 0.32% to 1.2924.
Market sentiment weakened after data on Saturday showed that Chinese industrial output slowed sharply last month. Separate reports showed that retail sales and fixed asset investment also slowed.
Chinese factory production rose just 6.9% annually in August, the slowest increase since March 2009, down from 9.0% in July.
GBP/USD slipped 0.17% to 1.6240, as investors eyed the upcoming referendum on Scottish independence, scheduled on Thursday.
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 sparked a broad based selloff in sterling last week.
USD/CHF re-approached a one-year peak, gaining 0.33% to 0.9363. Official data showed that Swiss producer price inflation fell 0.2% in August, confounding expectations for a 0.2% rise, after a flat reading in July.
AUD/USD slid 0.23% to 0.9017, after official data earlier showed that Australia's new motor vehicle sales declined by 1.8% last month, after a 1.3% drop in July.
Meanwhile, NZD/USD edged up 0.10% to 0.8160 and USD/CAD held steady at 1.1090.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, held steady at 84.49, not far from last week's 14-month peak of 84.65.
Later in the day, the U.S. was to release reports on manufacturing activity in the Empire State and industrial production.