Investing.com - The dollar hovered near five-month highs against other major currencies on Monday, after the release of upbeat U.S. data and as hopes for a rate hike and a tax overhaul in the U.S. before the end of the year continued to support demand for the greenback.
The greenback was boosted after data on Monday showed that activity in the U.S. manufacturing sector accelerated in September.
The U.S. dollar was already broadly supported after Federal Reserve Chair Janet Yellen indicated last week that the central bank was sticking to plans for a third rate hike this year.
The dollar was also underpinned by fresh hopes for U.S. tax reform after the Trump administration outlined plans for a sweeping overhaul of the U.S. tax code last Wednesday.
The yen trimmed earlier losses, although USD/JPY was still up 0.08% at 112.59, while USD/CHF rose 0.21% to trade at 0.9706.
Investors grew slightly more cautious after a gunman opened fire at a country music festival on the Las Vegas Strip late Sunday, killing at least 50 people and wounding more than 200 others before the suspect was killed by police.
The death toll would make the attack the deadliest mass shooting in U.S. history.
Earlier Monday, data showed that confidence among Japan's manufacturers hit the highest level in ten years in September, helped by the weaker yen and strong global demand.
Elsewhere, EUR/USD dropped 0.54% to 1.1754 after Catalans voted for independence in a contested referendum on Sunday that ended in violence when police cracked down on polling booths, injuring hundreds of people.
Despite Spanish police measures to disrupt the referendum, which was declared unconstitutional by Madrid, the Catalan government said that 90% of the people votedin favour of breaking away, with a turnout of about 42%.
The Catalan government also blamed Madrid for the clashes on Sunday and called on the European Union to respond.
The pound was also lower, with GBP/USD down 0.79% at 1.3291, the lowest since September 14, after data showed that the UK manufacturing sector continued to expand in September, albeit at a slower pace.
The Australian dollar was steady, with AUD/USD at 0.7832, while NZD/USD slipped 0.25% to 0.7211.
Meanwhile, USD/CAD added 0.19% to trade at 1.2491, just off Friday'sfour-week high of 1.2530.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.48% at 93.36 by 10:50 a.m. ET (14:50 GMT), just off a five-week high of 93.51 hit earlier in the day.