U.S. Dollar Advances On Fed Rate Hike Optimism

The U.S. dollar firmed against its major counterparts in the Asian session on Tuesday, as overnight data showing faster than expected expansion in U.S. manufacturing activity in September added to hopes over a Fed rate hike in December.

Data from the Institute for Supply Management showed that its purchasing managers index climbed to 60.8 in September, the highest reading since May 2004, from 58.8 in August.

A reading above 50 indicates an expansion in manufacturing.

Fed Chair Janet Yellen speaks Wednesday while minutes of the last ECB meeting will be published on Thursday.

Traders await ADP private sector jobs data on Wednesday; weekly jobless claims, trade data, durable goods orders and factory orders on Thursday; followed by non-farm payrolls report, due on Friday for more clues about economy.

The currency has been trading in a positive territory on Monday.

The greenback climbed to a new 4-week high of 0.7148 against the kiwi, compared to Monday's closing value of 0.7195. If the greenback extends rise, 0.70 is possibly seen as its next resistance level.

The greenback advanced to near a 5-week high of 1.2538 versus the loonie and a 2-1/2-month high of 0.7786 against the aussie, from yesterday's closing values of 1.2506 and 0.7825, respectively. The greenback is likely to challenge resistance around 1.27 against the loonie and 0.76 against the aussie.

The greenback spiked up to 1.1696 against the euro, its strongest since September 17. The greenback is poised to locate resistance around the 1.16 region.

The greenback that closed yesterday's deals at 112.74 against the yen and 0.9746 against the franc strengthened to a 5-day high of 113.20 and a 4-month high of 0.9786, respectively. On the upside, 114.00 and 1.00 are likely seen as the next resistance levels for the greenback against the yen and the franc, respectively.

The greenback advanced to near a 3-week high of 1.3280 against the pound and held steady thereafter. The pair ended Monday's trading at 1.3271.

Looking ahead, U.K. construction PMI for September and Eurozone producer prices for August are set for release in the European session.

Federal Reserve Governor Jerome Powell speaks about regulatory reform at a financial regulation event jointly hosted by Reuters and George Washington University in Washington DC at 8:30 am ET.

At 12:30 pm ET, the Bank of Canada Deputy Governor Sylvain Leduc speaks about Canadian business creation and productivity at the Sherbrooke Chamber of Commerce, in Quebec.