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Dollar Gains Against Major Rivals On Rate Hike Hopes

The U.S. dollar climbed higher and scored gains over most of its major counterparts on Monday amid bets the Federal Reserve will aggressively hike rates. Weak economic data out of China contributed as well to the dollar's strength.

Recent comments from some Fed officials supporting sharp interest rate hikes continued to aid the dollar's uptick.

Traders also looked ahead to the Fed minutes, due out on Wednesday, for clues about the pace of rate hikes in the future.

China's industrial production and retail sales growth for July came in well below estimates, youth unemployment hit a record high in July, investment into real estate fell at a faster pace in July than June and investment into manufacturing slowed its pace of growth, suggesting that the post-lockdown recovery is losing steam.

A surprise interest rate cut by China's central bank has added to concerns about slowing growth in the world's second largest economy.

In U.S. economic news, the New York Federal Reserve released a report unexpectedly showing a substantial contraction in regional manufacturing activity in the month of August.

The New York Fed said its general business conditions index plummeted to a negative 31.3 in August from a positive 11.1 in July, with a negative reading indicating a contraction in regional manufacturing activity. Economists had expected the index to show a much more modest decrease to a positive 8.5.

A separate report released by the National Association of Home Builders unexpectedly showed a continued deterioration in U.S. homebuilder confidence in the month of August.

The report showed the NAHB/Wells Fargo Housing Market Index dropped to 49 in August from 55 in July. Economists had expected the index to come in unchanged.

The dollar index climbed to 106.55, gaining nearly 0.9%.

Against the Euro, the dollar firmed to $1.0159 from $1.0259

The dollar traded at $1.2055 against Pound Sterling, strengthening from $1.2138

Against the Japanese currency, the dollar was weak at 133.31 yen, easing from 133.45 yen.

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