Investing.com - The dollar held steady at two-month highs against the other major currencies on Monday, as comments by Federal Reserve Chair Janet Yellen signaling the possibility for upcoming rate hikes boosted demand for the greenback.
Trade volumes looked likely to remain light on Monday with financial markets in the U.K. shut for a public holiday and U.S. markets closed for Memorial Day.
USD/JPY climbed 0.66% to a one-month high of 111.10.
The greenback strengthened broadly after Fed Chair Yellen said Friday it would be appropriate for the central bank to raise rates “gradually and cautiously” in the coming months if the economy and the labor market continue to pick up as expected.
The U.S. dollar was also boosted after the U.S. Commerce Department reported on Friday that gross domestic product rose at an annualized rate of 0.8% in the three months to March, up from the initial estimate of 0.5%.
Meanwhile, demand for the yen remained under pressure following reports Japanese Prime Minister Shinzo Abe could delay a planned sales tax increase for a second time, after a similar tax increase in April 2014 derailed an economic recovery.
EUR/USD edged up 0.16% to 1.1132, off two-and-a-half month lows of 1.1097 hit overnight.
The dollar was higher against the pound, with GBP/USD down 0.29% at 1.4596 but lower against the Swiss franc, with USD/CHF shedding 0.21% to 0.9926.
Earlier Monday, the KOF Economic Research Agency said that its economic barometer rose to 102.9 in April from 102.6 in March, whose figure was revised down from 102.7. Analysts had expected the barometer to rise to 102.8 last month.
The Australian and New Zealand dollars weaker, with AUD/USD down 0.08% at 0.7174 and with NZD/USD slipping 0.15% to 0.6693.
In Australia, data on Monday showed that company operating profits declined by 4.7% in the first quarter, compared to expectations for a 0.1% rise and after a 2.8% fall in the three months to December.
Elsewhere, USD/CAD rose 0.34% to trade at 1.3064.
The commodity-currencies weakened as oil prices turned lower on Monday amid expectations for an increase in Canadian oil sands production this week.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was steady at 95.75, the highest since March 29.