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The dollar broadly rose Monday after strong US job growth in June suggested the Federal Reserve does not aggressively reduce interest rates later this month.
Non-farm payrolls in the United States rebounded in June to 224,000, a five-month high, Friday's data showed, surpbading 160,000 estimated by consensus among economists.
This solid result virtually eliminates any possibility of halving the Fed's rate at the end of July, but modest wage gains and other data showing that the world's largest economy was slowing could still prompt the central bank to cut rates by 25 basis points.
The dollar index climbed to $ 97,443, its highest level since June 19, as yields on US Treasuries rose in all areas.
The index, which measures the greenback against a basket of major currencies, was last quoted at 97,215, with Asian trade barely changing on Monday, while the euro traded at $ 1.126 .
The common currency was put under pressure on Friday after the data showed that German industrial orders had fallen much more than expected in May and that the Ministry of Economy had warned that this sector of the biggest economy in the world was in danger. Europe would probably remain weak in the next few months.
Against the yen, the dollar hit a record high of 108.640 on Friday, its highest level since 18 June. The pair was last listed at 108.33 yen.
"There is no great urgency for the Fed to act, and surely not with the move of half a percentage point," said Marc Chandler, senior market strategist at Bannockburn Global Forex.
While the attention of traders was quickly focused on the testimony of Federal Reserve Chairman Jerome Powell, expected Wednesday and Thursday, Chandler said that it might be too late to persuade the market that the Fed will not lower rates now.
"But Powell can oppose the idea that the Fed will cut rates by 75bp this year, pointing to continuing strong expansion, financial conditions, and perhaps a reduction in insurance terms."
The pound hit its all-time low in six months on Friday, after poor economic data and rising expectations of interest rate cuts by the Bank of England. Better-than-expected data on US jobs pushed the dollar higher, compounding sterling losses.
The pound plunged to $ 1.2481, its lowest level since the January 3 "flash crash" when the pound fell to $ 1.2409. It was quoted for the last time at $ 1.2525.
Elsewhere, the Turkish lira has weakened sharply after the dismissal of the central bank governor by President Tayyip Erdogan, raising concerns about the bank's independence.
The lira slipped to 5.8245 for a dollar, its lowest level in two weeks in early Asian trade and traded at 5.7500, after offsetting some of its losses.
"The lira has suffered a lot from the uncertainty surrounding Turkey's monetary sovereignty, coupled with the rising post-employment dollar .I think the thoughtless reaction is over," said Koichi Kobayashi, director General of the Financial and Financial Products Trading Division at Mitsubishi UFJ Trust and Banking Corp.
Governor Murat Cetinkaya, whose term was to last until 2020, was replaced by his deputy Murat Uysal, announced a presidential decree issued early Saturday in the official journal.
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