The U.S. dollar rose to its highest in 14 years against the euro and a basket of major currencies on Tuesday after data showed solid growth in U.S. manufacturing.
The dollar index rose to 103.820, its highest level since December 2002 after data showed U.S. factory activity accelerated to a two-year high last month and construction spending rose to its highest in 10-1/2 years in November.
The index, which tracks the greenback against a basket of world currencies, appeared set for its biggest one-day percentage rise in more than two weeks in 2017's first full day of trading.
"Job growth appears to be picking up, orders are picking up quite strongly, prices are increasing quite strongly as well," said Shaun Osborne, currency strategist at Scotia Capital in Toronto. "That suggests the (Federal Reserve) is going to have to remain active in this kind of environment. So this on the whole is a generally constructive set of data for the dollar here in a time of the year where typically the dollar does quite well."
The growing consistency of strong U.S. economic reports has led to expectations of increased tightening of U.S. interest rates from the Fed and rosier outlooks on the overall health of the world's largest economy, analysts said.
That has helped elevate the dollar to its strongest in nearly a decade and a half as investors gear up for expected cuts in regulations and tax rates, as well as increased fiscal spending from the administration of President-elect Donald Trump.