The dollar rose broadly today as investors took profits on other major currencies which had climbed to multi-month highs on hopes for a recovery in the global economy.
Some traders said a cautious tone from policy makers who gathered at a Group of Eight finance ministers meeting on the weekend helped temper recent optimism about the economy, encouraging bets in riskier assets to be cut further.
Commodity-linked currencies such as the Australian dollar were under additional pressure after oil prices fell in Asian trade, extending their slide from more than seven-month highs above $73 struck last week.
"The market began taking profits on gains in emerging market currencies as well as higher-yielding currencies before the G8 meeting, and this is continuing as many investors still have their doubts about the recent excessive optimism over an economic recovery," said a senior trader at a Japanese bank.
The G8 nations, heartened by signs the credit crisis is easing, have started to consider how to unwind rescue steps for their economies, their finance ministers said on Saturday.
But they also warned there must be firmer signs of recovery before any of the massive public stimulus for the economy is withdrawn.
"The G8, as expected, did not lay out the details of the exit strategies for their crisis policies," said Kosuke Hanao, head of treasury product sales at HSBC in Tokyo.
The dollar index, a gauge of the greenback's performance against six other major currencies, rose 0.4 per cent to 80.505.
The euro dropped 0.5 per cent from late New York trade to $1.3942, extending a fall made after data today showed a plunge in euro zone industrial production in April.
Traders said the euro came under selling pressure after the Daily Telegraphreported on its website that Germany's top industrial group has warned that Germany's credit crunch is deepening.
The euro dropped 0.5 per cent to 137.17 yen, dragging the dollar lower against the yen, traders said.
Reuters