The dollar was broadly higher against the other major currencies on Friday, as recent upbeat U.S. economic reports continued to support and investors awaited upcoming U.S. employment data.
Demand for the dollar remained supported after the Labor Department on Thursday reported that the U.S. employment cost index rose by 0.7% in the seconf quarter, progressing at the fastest rate since September 2008, after a 0.3% increase in the first quarter.
The report came a day after official data showed that the U.S. economy rebounded more strongly than expected in the second quarter, fuelling speculation over the timing of a possible U.S. rate hike.
The euro was steady, near eight-month lows, with EUR/USD dipping 0.02% to 1.3387.
Markit research group earlier said that Germany's manufacturing purchasing managers' index fell to 52.4 last month from 52.9 in June. Analysts had expected the index to remain unchanged.
For the entire euro zone, Markit said the manufacturing PMI ticked down to 51.8 in July, from a reading of 51.9 the previous month. Analysts had also expected the index to remain unchanged.
The single currency also remained under pressure after official data on Thursday showed that the annual rate of inflation in the euro area slowed to a five year low of 0.4% in July from 0.5% in June.
The data added to pressure on the European Central Bank to implement further stimulus measures to shore up growth and stave off the threat of deflation in the currency bloc.
Sterling hit fresh one-and-a-half month lows, with GBP/USD shedding 0.25% to 1.6843.
Markit said the U.K. manufacturing PMI fell to 55.4 last month, from a reading of 57.5 in June. Analysts had expected the index to slip to 57.2 in July.
Elsewhere, the dollar was higher against the yen, with USD/JPY edging up 0.14% to 102.93 and steady against the Swiss franc, with USD/CHF easing 0.02% to 0.9086.
The dollar was higher against its Australian, New Zealand and Canadian counterparts, with AUD/USD down 0.10% to 0.9285, NZD/USD slipping 0.18% to 0.8485 and with USD/CAD rising 0.26% to 1.0932.
The export-related currencies found some support after data showed that China's manufacturing PMI rose to 51.7 from 51.0 in July, beating market expectations.
But the report was offset by Markit's report showing that China's HSBC final manufacturing PMI ticked down to 51.7 last month from 52.0. Analysts had expected the index to remain unchanged.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.05% at 81.57, not far from highs of 81.66, the most since September 12
Later in the day, the U.S. was to release closely watched government data on nonfarm payrolls and the unemployment rate, while the Institute of Supply Management was to release data on manufacturing activity.