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Greenback is firm near nine-month peak on Fed rate outlook

On Tuesday, the evergreen buck held close to nine-month peaks against a basket of key currencies as solid American manufacturing activity as well as comments from a Federal Reserve official strengthened expectations for a US rate lift by year-end.

The greenback’s index against a basket of six key currencies, reached its highest value since early February, leaping to a peak of 98.846, having surged 3.6% so far this month.

Sturdy American manufacturing data spurred American bond yields and backed the greenback.

Preliminary Markit poll on Monday revealed that American manufacturing activity levels hit a one-year peak this month.

As the major American currency held firm, the common currency traded at $1.0870, within a whisker from its seven-month minimum of $1.0859 hit on Friday.

The greenback also had an edge against the Japanese yen, standing firm at 104.37 yen, which is below a 2-1/2-month peak of about 104.635 yen reached earlier this month.

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