The dollar edged higher against its peers on Monday, not far off a 10-week high hit after data showed US economic growth slowed less than expected and as global risk sentiment remained fragile.
The US currency has found support recently on safe-haven buying as investor demand for riskier assets waned on steep declines in world equity markets on worries over corporate earnings, geopolitical uncertainty and global growth.
“The development in the U equity market is the main focus in the foreign exchange market,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.
On Monday, the dollar index, which measures the greenback’s performance against a basket of six major currencies, gained 0.1 per cent to 96.446. The index has advanced 1.4 per cent this month.
On Friday, it rose as high as 96.860, its best level since Aug. 15, after data showed the US economy slowed less than expected in the Q3. But it later turned and ended 0.3 per cent lower on the day.
Trade tensions between the United States and China, and a steady pace of rate increases by the Federal Reserve, have boosted the dollar, which serves as a safe haven in times of turmoil and economic stress.
A strong US economy has also underpinned the dollar, although some weak corporate earnings have started to stoke doubts about the growth outlook, especially amid rising borrowing costs.
The euro dipped 0.1 per cent to $1.1395 even as German Chancellor Angela Merkel’s junior coalition partners gave her conservatives until next year to deliver more policy results.
Against the yen, the dollar held steady at 111.90 yen.
The dollar has weakened 2.3 per cent against the yen, which also acts as a safe haven in times of geopolitical turmoil, from a more than 11-month high of 114.55 yen reached on Oct. 4.