Reuters, Singapore

The dollar drifted higher in the Asia session on Tuesday, pausing a monthlong decline as investors weigh whether a roaring US economic recovery may force interest rates higher and are looking to upcoming economic data and policy speeches for clues.

The greenback rose about 0.2 per cent against the yen, euro and pound in trade thinned by holidays in China and Japan.

It stepped up slightly further against the trade-sensitive Australian and New Zealand counterparts while the dollar index against a basket of major rivals added 0.2 per cent to 91.151.

The advances partly reverse Monday’s losses and leave the index about 0.8 per cent above a one-month low struck last week.

Traders said its next moves hinge on US labour data due Friday and clues in the interim about the thinking of Federal Reserve policymakers.

The euro last sat at $1.2036 while a dollar bought 109.29 yen. The Aussie dollar was 0.3 per cent softer at $0.7740 and the kiwi down 0.4 per cent to $0.7171.

“Markets will not be comfortable pushing the dollar all the way down given this in-your-face US outperformance, and how much longer this may last given outbreaks happening elsewhere,” said Mizuho economist Vishnu Varathan in Singapore.