NEW YORK: The dollar rose on Monday as the euro dropped on weak German economic data and comments by European Central Bank chief Mario Draghi raised market expectations of quantitative easing in the euro zone.
The U.S. dollar index, which values the greenback against a basket of a half dozen major currencies, was up 0.22 percent in early New York trading after touching a 2014 high of 82.588.
The index, which was up for a seventh straight session, was last at these levels in September 2013.
"The (dollar) is strong, but most importantly the (euro) is weak, having dropped to a fresh 11-month low on President Draghi's recognition that inflation expectations have fallen," said Scotia Capital strategist Camilla Sutton in Toronto.
Germany's Ifo business climate index, based on a monthly survey of some 7,000 companies, fell to 106.3 from 108, undershooting a Reuters consensus forecast of 107, as a conflict between Russia and Ukraine took its toll on Europe's biggest economy.
The data added to expectations that the ECB may have to ease policy sooner rather than later and drove down yields on most euro zone government bonds to record lows.
The euro skidded against the dollar to $1.3184 after the Ifo survey was released, its lowest since September 2013. It was last trading at $1.3196 down about 0.4 percent on the day.
The euro also touched a 19-month low against the Swiss franc on the first day of trading after Draghi's speech. The currency shared by 18 countries last stood at 1.2083 versus the franc after touching a low of 1.208 last seen in January 2013.
In stronger language than he has used in the past, ECB head Draghi said on Friday the central bank was prepared to respond with all its "available" tools should inflation drop further.
The ECB holds its next policy review on Sept. 4.
"The FX market has interpreted Draghi's statement as meaning that broad-based asset purchases, or quantitative easing, has now become more likely," said Lutz Karpowitz, currency strategist at Commerzbank.
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