Investing.com - The dollar was little changed, hovering close to a four-year high against a basket of other major currencies on Tuesday after data showed that the U.S. manufacturing sector expanded in September.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was steady at 84.76, after rising to highs of 84.86 on Monday, the most since July 2010.
Research group Markit reported that the preliminary reading of the U.S. manufacturing purchasing managers’ index came in at 57.9 in September, unchanged from August’s reading and the highest since April 2010.
The dollar has rallied in recent months, boosted by expectations that the strengthening recovery in the U.S. would prompt the Fed to raise interest rates sooner than markets expect.
USD/JPY was steady at 108.85, off last Friday's six year peaks of 109.45, while USD/CHF slipped 0.11% to 0.9388.
The euro edged higher, with EUR/USD up 0.07% to 1.2858, recovering from 14-month lows of 1.2816 struck overnight.
Output in the euro zone’s private sector grew at the slowest rate so far this year in September data on Tuesday showed, adding to fears over the outlook for the recovery in the region.
Markit reported that the euro zone composite output index, which measures the combined output of both the manufacturing and service sectors slumped to a nine month low of 52.3 from 52.5 in August.
The bloc’s services PMI slid to a three month low of 52.8 from 53.1 last month, while the manufacturing index ticked down to a 14 month low of 50.5 from 50.7.
The weak data fuelled expectations for additional stimulus measures from the European Central Bank to help shore up the recovery in the region.
The pound was little changed, with GBP/USD at 1.6358 as data on Tuesday showed that U.K. public sector borrowing increased from a year earlier in August.
The commodity linked dollars erased gains posted earlier in the day after data showed that factory activity in China unexpectedly picked up this month, easing concerns over a slowdown in the world's second-largest economy.
The preliminary reading of China’s HSBC manufacturing index for September came in at 50.5, ahead of expectations for 50.0 and up from the final reading of 50.2 in August.
AUD/USD fell 0.29% to trade at 0.8847, while NZD/USD retreated 0.80% to 0.8055.
Meanwhile, the Canadian dollar held steady, with USD/CAD at 1.1041 after data showed that Canadian retail sales unexpectedly fell in July, following six consecutive months of gains.