Early trade in New York: Dollar rises against basket of currencies

NEW YORK: The dollar was up against a basket of currencies on Monday as investors unwound some recent short positions following the currency's weakest monthly performance in a decade.

The dollar index, which measures the greenback against a basket of leading currencies, posted a more than 4% decline for July, its biggest monthly drop since September 2010.

The weakness has been tied to market expectations for further easing of US monetary policy, and a lack of agreement among US lawmakers on further fiscal stimulus. Falling US bond yields have also been cited as a factor.

The day's gains may be tied to investors partially moving out of the crowded short position, strategists said.

The dollar pared gains following weaker-than-expected US economic data. US construction spending fell to a one-year low in June; economists had forecast an increase.

The dollar index was last up 0.5% at 93.836.

Speculators' net shorts on the US dollar have soared to their highest since August 2011 at $24.27 billion, Reuters calculations and US Commodity Futures Trading Commission data show.

Against the Japanese yen, the dollar gained 0.4% to push past the 106-yen-per dollar mark.

The single currency last traded at $1.1727, down 0.4%. It hit a two-year high of $1.1908 reached last week.