Investing.com - The dollar eased against a basket of the other major currencies on Monday, but held near 14-year highs amid expectations for increased fiscal spending under the Trump administration and higher U.S. interest rates.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.3% to 101.11.
The index ended at 101.41 late Friday, its highest close since April 2003.
The dollar has strengthened across the board following the outcome of the U.S. presidential election, tracking rising U.S. Treasury yields amid expectations that President-elect Trump’s plans to ramp up fiscal spending and cut taxes will spur economic growth and inflation.
Faster growth would spark inflation, which in turn would prompt the Federal Reserve to tighten monetary policy a faster rate than had previously been expected.
The dollar rally has also been boosted by bets that the U.S. central bank will raise interest rates at its December 13-14 meeting.
Fed Chair Janet Yellen on Thursday reiterated that a rate hike “could well become appropriate relatively soon.”
Investors have assigned a 100.2% chance of a rate hike at the Fed's December meeting; according to federal funds futures tracked Investing.com's Fed Rate Monitor Tool.
Expectations for higher interest rates typically boost the dollar by making it more attractive to yield seeking investors.
EUR/USD was up 0.38% at 1.0630, pulling away from Friday’s 11-month lows of 1.0568.
The dollar was steady at five-and-a-half month highs against the yen, with USD/JPY at 110.92.
The Swiss franc edged higher, with USD/CHF slipping 0.17% to 1.0085, while the pound was little changed, with GBP/USD at 1.2348.
The Australian dollar also regained ground, with AUD/USD rising 0.25% to 0.7349, having fallen to five-month trough of 0.7311 overnight.