Dollar Index clocks fresh 7-week high of 93.89

Dollar Index [DXY] clocked a fresh 7-week high of 93.89 as the odds of the December Fed rate hike rose to 77% on the back of firm data releases.

The US 10-year treasury yield rose to a three- month high of 2.371% on Monday after a measure of US manufacturing activity surged to a 13-1/2-year high last month. The Institute for Supply Management (ISM) said its index of U.S. factory activity rose to 60.8 last month, the highest reading since May 2004, from 58.8 in August.

The USD may remain ahead in the day as the 10-year currently trades around 2.38%; well above the 200-DMA level of 2.324%.

Also playing a major role in keeping the USD bid is the decline in the EUR/USD pair to 7-week low of 1.1702 on Spanish clash. The crisis could deepen further if the Catalan regional parliament uses the vote as justification for a unilateral declaration of independence.

The Dollar Index may rise above 94.00 levels if the European desks offer EUR in response to heigthened political uncertainty in Spain.