Investing.com - The dollar dipped against the yen on Tuesday, holding below six year highs and was steady near 14-month highs against the euro as markets digested data showed that factory activity in China unexpectedly picked up this month.
USD/JPY was last down 0.09% to 108.73, not far from the six year peaks of 109.45 struck on Friday.
EUR/USD was trading at 1.2844, hovering just above Monday’s 14-month trough of 1.2815.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was steady at 84.78 after rising to peaks of 84.86 on Monday, the highest since July 2010.
Market sentiment was boosted after a report showed that 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.
The data eased concerns over a slowdown in the world’s second-largest economy.
Demand for the dollar continued to be underpinned by expectations that the strengthening recovery in the U.S. would prompt the Federal Reserve to raise interest rates sooner than markets expect.
The yen and the euro remained under heavy session pressure amid expectations that the Japanese and European central banks would stick to a looser monetary policy stance.
On Monday, European Central Bank President Mario Draghi reiterated that the bank was prepared to ease monetary policy further should it become necessary to further address risks of a too prolonged period of low inflation in the euro area.
The euro zone was to release what would be closely watched data on private sector activity later in the day.