USD drops to lowest level since September

The greenback retreats as investors look for higher returns in more risky assets amid improved economic news

The U.S. dollar Monday fell against a basket of currencies to its lowest since September as a rally in stocks and encouraging economic data from around the world eroded the greenback's safe-haven appeal.

On Wall Street, the broader S&P 500 stock index topped the psychologically important 1,000 level for the first time in nine months. European shares ended at nine-month highs and oil rallies 3% to above $71 a barrel.

Positive manufacturing reports from the United States, Europe and China lifted hopes about the global economy and boosted risk appetite. That drove the euro to a 2009 high and sterling and the Australian and New Zealand dollars to their highest since autumn versus the U.S. currency. he bulls in the equity markets are winning the war so far and that has determined the direction for the U.S. dollar.

So long as equity market interest remains positive, then the U.S. dollar will most likely remain on the back foot. The ICE Futures dollar index, a gauge of the U.S. currency's performance against six other major currencies, fell 1% to 77.583, having fallen to 77.451, its lowest since Sept. 29. The euro hit its highest this year at $1.4445 and was last at $1.4416, up 1.2% on the day, according to Reuters data.

The U.S. currency has come under heavy pressure in recent weeks as positive economic releases and earnings news dried up safe-haven demand and fueled a rally in stocks, commodities and higher-yielding currencies. The increase in risk appetite also pushed the yen sharply lower.

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Reuters contributed to this article