Dollar stands tall as investors turn focus back to Fed

The dollar held near seven-month highs in early Asian trading on Monday, as investors turned their focus from last week's deadly attacks in Paris to growing expectations the US Federal Reserve was poised to hike interest rates next month.

The dollar index, which tracks the US currency against six major rivals, edged up to 99.401, approaching a seven-month high of 99.504 marked last week in the wake of surprisingly robust US jobs data.

The latest data from the Commodity Futures Trading Commission, released on Monday due to last week's US Veteran's Day holiday, showed that speculators boosted their dollar bets in the week ended November 10 to their highest levels since mid-August. 

US consumer price data scheduled for release later this session is expected to provide further clues about the possibility that the US central bank will raise interest rates as early as next month - the first hike in borrowing costs in nearly a decade.

The euro was flat in early Asian trade at $1.0685, after falling to a nearly 6-1/2-month low of $1.0674 overnight.

In sharp contrast with the Fed, the European Central Bank is considered very likely to ease its monetary policy further next month.

"Disappointment by the ECB at this stage would be tantamount to solidifying expectations at current levels for growth and inflation, a trap we fully expect them to avoid," Richard Cochinos, head of European G10 FX strategy at Citigroup, said in a note.

A Reuters poll of traders on Monday showed that most expected the ECB to diversify the 60 billion euros a month of mostly government bonds it has been buying since March to include municipal bonds.

The dollar added about 0.1% to 123.24 yen , moving away from the previous session's one-week low of 122.23 as investors' risk aversion faded. The yen is traditionally a safe-haven currency and gained after the Paris attacks.

French President Francois Hollande called on the United States and Russia to join a global coalition to destroy Islamic State in the wake of the deadly assault on targets in Paris, and announced a wave of measures to combat domestic terrorism.